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To: Rarebird who wrote (285898)	5/2/2004 9:46:07 PM
From: Michael Watkins	Respond to of 436258

Over the past three years, Gold has climbed from $US 255 to just below $US 430. This is the leg which (I profited from) has brought to an end the two decades plus of lower highs and lower lows in the $US Gold "price". Gold has only had 3 rallies since 1975. None of those rallies lasted longer than 4 years. This current rally is in its fourth year. You can't have it both ways, Michael. Yes, I can. What fundamental-only investors tend to forget is that price is ultimately one of the most important fundamentals of any market. Price oriented technicians like myself (should be obvious from my charts - they are uncluttered with a ton of useless (imo) indicators) focus our efforts on detecting when trends emerge, when they pause, and most importantly when they bend. The fundamental-only investor won't react to a significant change in underlying sentiment - and it is sentiment which determines what support, or lack of support, price will get - until long after the bend in the trend. I can have it both ways because my job is to detect changes in trend and its one I have developed some skill at. It is not necessary for me to be correct at every wiggle in the short term - when I detect a potential change in trend the underlying patterns generally have taken many weeks to play out. Sometimes many months. If I identify an important test and a potential for a change in trend to develop, I am not going to wait for months for it to "confirm" - generally speaking, there are ample opportunities to re-enter a market if the change of trend fails to materialize. I'm well aware of the underlying rationale for Gold bulls, well aware of the many risks to the economy. My own outlook on where the world is headed in the intermediate term is fairly bleak, but my job is to turn a profit from the market where I can. Occasionally that makes me long markets I have little interest or faith in. Occasionally that makes me short. I really don't care either way. But I can have it my way - its important for me personally to minimize volatility in my portfolios. I will not sit through significant losses or erosion of long held profits when I do not have to. Stepping out of Gold has proven to be entirely correct. trendvue.com And should the current picture reverse... I will step back in.

To: Rarebird who wrote (285898)	5/2/2004 9:57:56 PM
From: Michael Watkins	Read Replies (1) \| Respond to of 436258

I have to have another stab at this - and draw an analogy. I knew for a fact early in 1999 that the markets were going to keel over and suffer big time. Big, big time. My net profit from the market that year would have been much greater had I parked what I knew aside and simply traded nimbly and with protection. Instead I spend a lot of time waiting for stock specific issues to creep up so I could short them. It was satisfying but occasionally painful work. Would have been much easier for me to just wait until the keeling over begain and then apply my strong sense of the outcome. I did "ok" through 99 but I'll never take that approach - pissing in the wind, swimming upstream, whatever you want to call it - again. Its better to stand aside in fact than fight the current. So it is with Gold today. While it may run and run strong eventually, eventually (as we saw with how long it took the last mega bubble to break) can take a long time. Perhaps this explains my rationale more clearly than any chart will.