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| Gold - Still Missing From Most Investors' Radar
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After suffering what can only be described as
a depression-like bear market that saw gold fall to nearly
$250 an ounce, the gold market has risen over 60 percent.
Yet, outside of the metals and mining industries, virtually
no one has made gold part of their overall portfolio. This
bodes well for those of us who have felt $500 gold was not
a question of “if,” but “when?”
After parting ways from the metals and mining
industry in January 2000, I returned to the bullish camp after
visiting the 2003 PDAC Convention. There, I found dramatic
evidence that most metals had developed extremely bullish
fundamentals and mining and exploration stocks were “dirt”
cheap. Fast-forward to today, we find metals and mining shares
no longer cheap on average, but still in a quite favorable
fundamental and technical picture. The rallies we have seen
should continue well into 2005.
While base metals can continue leading the charge,
I suspect gold can move to the forefront as we get into 2005.
Why? There’s no doubt in my mind that China is the driving
force behind the base metals strength. And while that strength
can be tempered at times, the belief China will implode is
far-fetched in my book. This should maintain a decent underpinning
for base metals at least through the first half of 2005. It’s
the second half of 2005 and/or who wins the U.S. elections
that I believe can move gold onto most investors’ radar.
The fall of the U.S. dollar is only a matter
of time in my way of thinking and it can only be beneficial
to gold. However, geopolitical concerns are what make headlines
and I’m afraid things can only get a lot worse before
any real hope of them getting better. Iraq may or may not
make it, but in my heart of hearts, the real problem in the
Middle East is Iran. Tehran just announced it has begun converting
tons of uranium into gas, a key step in developing nuclear
weapons. In addition, they announced that their Shahab-3 ballistic
missile, which can hit Israel, is now operational. The International
Atomic Energy Agency called on Iran to cease all uranium-enrichment
activities. Iran has thumbed their noses to them and everyone
who has chimed in.
So why is Iran such a “hot” topic?
According to the U.S. State Department, Iran is the “most
active state-sponsor of terrorism in the world. It has deep
roots to terrorist groups Hezbollah and Hamas, and is known
to be harboring al Qaida operatives. There’s no way
the Israel government can live with a nuclear Iran. President
Bush clearly stated, “Our position is that Iran won’t
have a nuclear weapon.” So, if he wins, do his words
turn into a deed? If Kerry wins, will he see it the same way?
Or worse, will he appease Iran and make matters even worse
in the long run?
Gold has been one of the worse investments
for a long time. However, the lows of a few years ago are
now way behind us. The closer it gets to $500, the more likely
the “Don’t Worry, Be Happy” crowd on Wall
Street will have to sit up and take notice of it.
***
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