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What has happened to the price of gold?
This
market now moves solely on investor psychology,
on rampant emotions that can flip almost instantly, rather than
fundamental considerations. … In my opinion, the market was shouting
that the “war premium” in the gold price is probably higher than
most analysts reckoned.
These
are dangerous times in the gold market, as emotional irrationality
reigns supreme in establishing price levels. Leonard Kaplan, Prospector Asset Management, lkaplan@prospectorasset.com
In the past few days I have received a ton
of email from investors crying about the volatility of the gold
price & gold stocks. What
is that old saying? If you can’t take the heat get
out of the kitchen!
Personally,
I believe a lot of folks who have been in this market need to get
out. The long term fundamentals are great for gold
but there is going to be extreme volatility with or without a war
in Iraq. Let’s
listen to more of what Leonard has to say.
I like ole’ Leonard because he tells it like it is! Editor
…but,
in truth, the future price of gold depends strictly upon the upcoming
headlines and the news. At the end of the day, I would rather trade
fundamentals than
trade emotion or investor psychology, as it is a whole lot less
risky. … HOPE
is a very dangerous thing. Traders, investors, and speculators
must concentrate on the hard numbers and not the hype, or Hope. It
seems that the important participants in this market, the commercial/industrial
users along with the professional traders, are mostly “on hold”.
… Again, all depends on the news. But, even if the upcoming news events are very
positive for the world, I do not see gold collapsing in price.
Gold
remains in a long-term secular bull market
and, should we see a dip in price, it should be bought.
All that we can argue about is what the bottom could be, and I see
it somewhere between $325 and $335, even in the worst case.
Tell it like it is, Leonard!!! Let’s listen to part of that last statement
once again!!!
Gold remains in a long-term secular bull market and,
should we see a dip in price, it should be bought.
Leonard, what are you saying my friend? Are you sending a message to all the crying
babies out there now that they should be BUYING & not crying? And let’s listen to someone else who is correctly
defining investor sentiment during these challenging times.
Who wants to make a major investment now? Who wants to put his money on the line…or make
a major business commitment? “I think I’ll wait until after the
war is over…” is the standard
postponement. The Daily Reckoning, 3-12-2003
It always amazes me how investor sentiment
works. The majority of investors
always buy on momentum when the price is rising & only
the braver minority buy when prices are
low. Is
it any wonder the wealthy & well to do are in the minority? But let’s forget the war momentarily, though
that is very hard to do, & let’s look at the economic realities
descending down upon the financial world today.
World markets fall
World markets have tumbled on Wednesday, with European markets crashing
to multi-year lows while stocks on Wall Street were also trading
lower.
And
Germany is now in the grips
of a market downturn worse than it suffered in the Great Depression, calculations at
investment bank Merrill Lynch have revealed.
"There's
one word for it - carnage. It's horrible," said Richard Wright,
at brokerage GNI in London.
Nobody has any confidence. Nobody wants to buy anything.
The point I am trying to get across is that
there is still financial carnage out there in the world. If you are thinking of buying into gold or gold
equities do not do so based on the temporary Iraq situation & how you may perceive its
final outcome. Read the following
excerpts on the present state of finances in Japan.
Another
crisis nears in Japan
Commentary: Banking system catastrophe looms
By Paul Erdman, CBS.MarketWatch.com, Last Update:
1:29 PM ET March 13, 2003
SAN FRANCISCO (CBS.MW) -- Given the current state of uncertainty
that has engulfed the world's financial markets, all we need is
yet another crisis.
But one is definitely brewing in Japan.
Sooner
or later that nation is going to be hit by a financial crisis of
major proportions. Given the facts that Japan's economy is the world's
second largest, that Japan is the largest exporter of capital on
earth, that the Bank of Japan owns hundreds of billions of U.S.
Treasury bonds and notes, a financial crisis there could send new
shock waves around the world.
The entire banking system there is tottering on the edge of catastrophe.
The situation is so acute that it requires
management on a day-to-day basis.
On
Wednesday, the Nihon Keizai Shimbun, that country's equivalent of
our Wall Street Journal and hardly a publication that has alarmist
tendencies, reported: "The Bank of Japan supplied a large amount
of funds to the money market today, as it did yesterday,
to avoid a systemic financial crisis."
That
same day it also reported that an executive of a major bank received
a phone call from a close aide to Prime Minister Junichiro Koizume
on Sunday who asked: "What emergency
steps can the government take to avert a meltdown of the financial
system should the stock market crash after the war on Iraq starts?" Paul Erdman, CBS.MarketWatch.com
Japan is the world’s 2nd largest economy yet
it is right on the edge of an economic catastrophe. As I have written
in previous articles these are NOT normal times we are living in. Our world is resting on a pivotal edge from which a
fall will occur. If the extreme
volatility of the gold market is too much for your nerves to take
then get out & put your money in a low yield money fund.
No one ever promised that gold’s rise would come smoothly
& without significant temporary price corrections.
* * * * * *
I get so tired of people
who have invested substantial sums of money in the gold market,
but they are too cheap to spend a few lousy bucks investing in a
financial investment publication.
And you know who I am referring to.
Yes, you. You invest thousands of dollars in a market
sector, but rely on free financial advice you find at no cost over
the Internet. Remember the
old saying, “You get what you pay for.”
And if you cannot make
up your mind which financial newsletter to subscribe to then toss
a coin.
At
Gold Letter we follow all the major gold analysts & review only
those gold mining companies considered to represent the best speculations.
http://goldletterdv.com/subscription.php?uid=d3961c0bba2a2cfbb434bd5651c2e667
NEVER
GIVE UP YOUR DREAMS
David N. Vaughn
Gold Letter, Inc.
David4054@charter.net
March 14, 2003
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