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To: Secret_Agent_Man who wrote (215210)	1/16/2003 7:54:40 PM
From: Secret_Agent_Man	Respond to of 436258

The Dow has been ranging between the 8200 and 9040 since 18th October 2002. Much of the market world is waiting to see which way it will break out. The index shows that the average weight of buying and selling bias is sitting near to the downward pointing to 200 day moving average. The bullies are arguing that there is plenty of scope for a push to near 10,000 in the first half of 2003 and expect some improvements in company earnings reports coming through. While the bullies acknowledge the global economic and geopolitical factors that may damage confidence further, they also expect relatively quick successes by the U.S. military in the Middle East. North Korea is a new concern -- mainly in the US think it is a more dangerous situation than what is going on in Iraq. The spectre of tons of biological weapons and perhaps as many as 15 nuclear weapons already in the possession of the North Koreans according to some reports -- concerns the free world and the marketplace. Particularly now that it is becoming apparent that the North Koreans have an expanding Intercontinental Ballistic Missile delivery capacity, already or soon capable of reaching the Western seaboard of the US. Worrying geopolitical factors such as these, combined with sluggish growth in the US and slower growth in much of the rest of the world -- make for stagnant or negative fundamentals for stockmarkets. Technically, most of the important US market indices are below downward pointing 200 day moving averages -- and although there is evidence and scope for isolated rallies such as the one we have just seen on Intel -- behavioural counts and long-term cycles and long-term momentum are stagnant or seriously negative. The weaker trend of the US$ relative to other leading currencies since October 2000 -- also says a lot in favour of the bears. Interesting to see that Gold funds were among the best performers last year. The US$, the Gold price, the behaviour of commodities of some 54 since 1999 -- or indicate that a shift from paper assets to hard assets is underway. The move to encourage Gold as a medium of exchange by the Muslim world e.g. the Malaysian Dinar as well as the development of new Gold exchanges in Dakar and China - as well as anti-American sentiment -- are setting up a very difficult situation for the US. The US$ is being challenged as the world's reserve currency -- and if that challenge accelerates as much of the Muslim world would like to see, US Treasury Bonds and Wall Street are also vulnerable to a dump - and that could mean that US commercial property prices would also fall. That scenario would lead to a meltdown of the global financial system, leading to a rocketing Gold price. We are getting feedback from more and more traders who usually have their ears close to the ground -- that several of the G8 countries have been allowing their central bankers to lease out or to sell a substantial portion of national gold reserves for a nominal return from multinational banks and dealers. "The vaults on nearly empty" says Bill Murphy of www.leMetropoleCafe.com Sounds difficult to believe, but if he is only 10% right - currency parameters can become explosive. Since the beginning of the 1990s the world assumed that a stronger US$ was the trend. Now that the trend has changed, we are told that many of those multinational banks and dealers will be forced to buy in physical gold to cover their contracts -- if the $Gold price stays above the $325 area, where their put options ran into serious trouble. In the second half of the 1990s, a lower Gold price was almost a sure thing -- because central bankers and multinational private banks all supported a stronger US$ and US growth justified that view. At the time, gold was openly being talked about as a curious relic of history, with no intrinsic value except sentiment. There lies the rub! The investment world loves to dismiss sentiment as a mere departure from "market fundamentals". Technicians on the other hand, recognise that sentiment is one of the major market dynamics which has to be analysed and quantified. Now that the crisis is one of confidence -- doesn't help to supply more Gold quickly. For years, the gold mines have been cutting back on costs and in many instances have been cutting back on supply -- as the Gold price struggled. Since 1996, industrial, jewellery and safe haven demand has slightly exceeded global mining output. The shortfall has been made up by central bank selling. Should safe haven demand and the demand by bankers needing to square positions escalate -- a squeeze as big as that in the late 1970s when the Gold price when to $821 is probable. Long term behavioural counts show scope for the $Gold price to reach $1350 within two or three years, should the $400 resistance area be penetrated. The fact that little of the investment world understands this, could indicate a better probability that this contrarian view is correct. Conclusion: as a combination of and geopolitical and global economic concerns escalate and while the US$ is under pressure, accumulate gold coins, gold shares -- using every dip in the Gold price to buy at best. We think that the Gold sector will outperform every other asset class in the next few years. The swings along the way will be good for traders -- but will also deliver rewards for medium and long-term investors willing to recognise changes in global paradigms underway. Oh yes - some cycle signatures suggest that from about 17th January to 7th February - we could see the next phase of the $Gold price push to near the $400's. The behaviour of the US$ will corrobrate whether this scenario is underway. Best regards Victor Hugo www.HugoCapital.com www. saGOLDS.com