“We Ain’t Seen Nuthin’ yet.”

The Gold Report December 2003 www.theaureport.com

“We think the bull market in gold has only just begun,” says the author of J. Taylor’s Gold & Technology Stocks Newsletter. “First of all gold has been so severely depressed that even if we had a healthy global economy, it could easily rise another $200 before it became fully priced. However, the world has no end of economic problems, . . . Therefore we think something more like a $3,000 gold price is a kind of number that is even more realistic than Frank Veneroso’s estimate of a $600 “commodity price” for gold, during the best of times, during the second half of the 1990s.”

Doug Casey, author Doug Casey’s International Speculator, believes we’ve only just entered into the second stage of the big bull market. By the time we get to the third and final stage – which Casey says is a couple of years away yet –- “The public will be chasing these things the way they ran after Internet stocks. How do I know? Because I’ve been in this market for thirty years, and I’ve seen it happen five times in the past (1973, 1980, 1983, 1987, and 1996, to be precise as to the peak years). But this one will be the biggest of them all, because not only will gold (and commodities in general) be running, but the public, trained by the 1983-2000 bull market, all have brokerage accounts, and will be looking for the next hot sector. And the gold/resource story will tell exceedingly well. What’s coming up is going to be a mania for the record books.”

Gold analysts have consistently pointed to the weakening U.S. dollar as one of the key drivers behind the latest gold rush. In a much ballyhooed article that appeared recently in Fortune magazine, Warren Buffett caused a stir by telling readers that for the first time in 72 years, Berkshire Hathaway was investing in foreign currencies.

Buffett’s article prompted this response from James Turk, of the Freemarket Gold & Money Report: “This is BIG!!! In the past couple of years a number of respected leaders in finance and investing have recommended diversifying out of the U.S. dollar. They include Soros and Templeton, and now Buffett has joined the parade. For the first time in his life, this top name of finance is betting against the U.S. dollar.

“The trend for the dollar is turning, and its outlook is getting increasingly worse. Consequently, it is necessary to diversify out of the dollar, or as Buffett puts it, ‘to build an ark.’

Is Buffett buying gold? “Buffett does not say in the Fortune article precisely what his ark looks like,” writes Turk. “However, one can assume that he has the euro and perhaps the currencies of the commodity producing countries like Canada and Australia. And when you read between the lines of what he is saying, one has to wonder if he is not buying gold too?”

What does the latest buzz about gold mean for investors in gold stocks? Casey points out that the gold stocks on his monitored list rose 18.74% in November. Some analysts warn that now is not the time to try to turn a fast buck in the market.

“. . . the gold market has had quite a run, and quite a few well-known newsletter writers, especially those who approach the market using technical analysis, are suggesting it may be time to take some gold share profits,” says Taylor. “True, markets never go straight up, even in a bull market. However, when the primary trend is a bull market, it can be very dangerous to try to pick tops to exit and bottoms to reenter. More often than not, folks who try to trade end up missing the next big move upward during a primary bull market. Either the price of the item never declines significantly to get you back in or if it does, getting back in at the right time is never easy because you may be tempted to want a still-cheaper price.”

Taylor says he doesn’t care how good a technical analyst you are, it’s very difficult to win consistently in the trading game. “Remember, only about 10% of traders make money consistently. My view and my strategy for this newsletter is to ride the primary trends with little worry about trading in and out of the various moves within the primary trend. To be sure, we will make judgment calls from time to time on whether to buy or sell individual stocks. But as long as we are convinced we are in a bull market, we will continue to own and add to our positions on the long side of the market in question. Likewise, when we are convinced the primary trend is a bear market, we will either be out of the market in question entirely or when a means of shorting the market is available . . , we will continue to trade from the short side.”

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