A Continued Strong Bull Market

The Gold Report February 18, 2004 www.theaureport.com

If the experts are right, the recent corrections in the major markets, including gold, may soon run their course. Key indicators point to a continued strong bull market, for both gold and silver.

“Gold has remained in a short-term correction since breaking below $420 on January 15th,” stated James Turk in the February 9 issue of The Freemarket Gold & Money Report. “It appears that the correction has just about punched itself out, which is an observation confirmed by gold’s strong price advance this past Friday.”

Pamela and Mary Ann Aden, authors of The Aden Forecast, believe that the current correction is a “technically moderate decline” and won’t last much longer. “But even if gold falls further, which it could over the next month or so, it’ll remain bullish above $365. Then once this weakness is over, it’ll likely continue up to higher highs”

The recent correction in gold prices was “normal and healthy,” say the Aden sisters, who also noted in the February issue of their newsletter that the major trends affecting the markets remain intact. “Corrections within the major trends will happen from time to time when a market goes too far, too fast, like a rubber band that’s been stretched. Remember, no market goes straight up or straight down and what we’re seeing is completely normal.”

In a mid-month update, the Aden sisters noted that the U.S. dollar had just fallen to a new low and “if it stays in new low territory, it's headed lower. This too is a positive sign for gold.”

Indeed, trends in world currencies continue to bode well for gold, says Turk, who recommends investors continue to minimize their exposure to the US dollar and maximize their exposure to gold, and to a lesser extent, the euro and Swiss franc. Turk goes so far to as to say that the world’s monetary system is broken, and it’s “only a matter of time before it blows up.

“For this reason, if you are holding euros and Swiss francs, or any national currency for that matter, your money is at risk,” Turk warns. “And while it is of course prudent to diversify risk by holding different currencies, it is becoming increasingly less prudent to hold fiat national currencies. The alternative is to hold tangibles of all sorts, and particularly gold, the most liquid tangible of all.”

Turk also likes gold stocks, which he believes are still in a bull market, even though they have become over-bought on a short-term basis. “I continue the same policy I have been recommending since turning bullish on these stocks in October 2000 – I recommend that we continue accumulating them, month in and month out. From a long-term perspective, my recommended mining stocks are still good value, . . .”

Robert Bishop, in the February 8 issue of the Gold Mining Stock Report, offers a similar opinion. “The stocks, it seems to me, are trying to find their bottoms in this range, and that’s when I want to be spending money on gold stocks.”

Or silver stocks. Silver is poised to outperform gold this year, according to the Aden sisters. Right now, it’s due for a downward correction – which could drive the price down as low as $5.70. “Major support is at $5 and we recommend buying silver during weakness.”

Turk, who agrees that silver will continue to outperform gold this year, expects an “upward explosion in the silver price, taking silver to the $10 area.” Don’t let a short-term correction “take your eyes off the potential for much higher prices,” he says.

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