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Strategies & Market Trends : Strictly: Drilling II -- Ignore unavailable to you. Want to Upgrade?

To: Arik T.G. who wrote (31385)	7/16/2003 6:44:41 PM
From: isopatch	Read Replies (2) \| Respond to of 36161

<the metal is going to outperform the stocks now... cause valuations for the entire market are too high.> I agree. Looking back at the past 4 or more months, we've gone through a period where - one by one - just about every industry group has had a good Intermediate Term rally. In the past few weeks, sector after sector has reached the upper end of it's trading range, the upper end of it's fundamental valuation range, and the upper end of it's bullish sentiment range. Too many people feel the gold stocks automatically go higher whenever the broad stock indices enter an important correction. But you and I know market history doesn't bear that out. Particularly after the PMs have already had a very good rally - with the rest of the market - off their lows from a few months back. There will always a couple of small caps here and there that will do well without a sector rally. But even for an extraordinarily good stock picker (which I don't claim to be in the PM sector) there's a problem. If the account(s) you're running involve a fairly large amount of capital, you can't get in, or out, of just a few small caps in the size necessary to deploy more than a fraction of cash reserves. In a broad sector rally (where most small, mid and large caps offer good upside) we could put a lot of money to work. But, your work and mine seem to agree a broad rally that will move the HUI or the XAU above the recent highs isn't likely in the weeks ahead. Or course, if we're proven wrong about that a few weeks from now? I'm sure there're a few perma bull/gold buggers out there who will bring such an error to our attention.<ggg> Iso