And how is gold doing?
Gold continues to remain strong & inflexible.
Everyone is now wondering what the year 2005 holds in store for
gold. But really before we can predict what the next year will bring
for gold we must understand what has happened with gold this past
year in 2004.
All of us know very well that since the earlier part
of this year, 2004, that investors basically sat on the side lines
& took a break from participating investing in the gold stocks.
THIS REALLY IS NOT DIFFICULT TO UNDERSTAND IF
WE REMIND OURSELVES THAT DURING THE 20 LONG YEARS GOLD REMAINED
IN A BEAR MARKET IT CAME TO BE EXPECTED THAT ANY GOLD RALLY WAS
ALWAYS SHORT LIVED & TEMPORARY.
Also, bear in mind that for 20 long years society
has become convinced that long bull markets in the general equities
market are normal & are always to be expected. Even now there
remain those poor souls who remain glued to their TV sets every
day watching the money channel waiting patiently for the bull market
to return & for the Dow to continue its anticipated climb to
25,000 & beyond.
It sometimes takes quite a while for old perceptions
to die. Let me repeat this because this is very important to understand.
When an entire generation becomes accustomed to the “status
quo” it is hard for anyone to notice the winds of change around
them & this is where we have been in 2004.
During 2004 this past year what investors did was
sit back and quietly observe this new phenomenon of a rising &
stable gold price. And while investors sat back to observe the gold
price they asked themselves if this gold bull was for real or just
another short term rally witnessed time & time again for 20
So even as gold climbed to 16 year highs to a lofty
peak of 456 an ounce it really was a very normal pattern of behavior
for the majority of investors to sit on the sidelines for all of
2004 to just sit idly by & watch the gold performance show without
participating. So now if we can come to grasp with these facts about
what happened in 2004 maybe now we can move foreword & postulate
what is going to occur next year in 2005.
So what does 2005 hold for gold?
Well, investors are becoming more comfortable with
gold’s new muscle & 2005 will demonstrate more confidence
in gold. I feel confident that in 2005 investors will slowly become
more comfortable with investing in gold equities.
Actually, I anticipate investors literally jumping
into gold stocks. I wrote at the beginning of George Bush’s
first term that we would see a repeat of the “Herbert Hoover”
scenario. And I believe that in 2005 we will begin to see more damaging
effects from the US dollars slide down hill. And as these economic
crises multiply gold equities will become an irresistible temptation.
And let’s talk a moment about the US dollar.
Let’s understand one very important concept
about the real health of our economy & where the US dollar is
heading. And actually where the US dollar already is. Read the following
“To say the dollar is “heading”
toward a crisis would be like the captain of the Titanic saying
after his ship hit the iceberg that it was facing a “potential”
disaster. That’s crazy. The disaster was the collision itself.
The ship was in crisis the moment that block of ice ripped a hole
in her hull.” Derek K. Artsdalen
This guy does a good job with his analogy of what
is happening to the dollar & where it’s at already. Now
read what else Mr. Artsdalen has to say.
“MY POINT IS THAT A DOLLAR CRISIS IS NOT
“COMING.” IT’S ALREADY HERE.” DEREK K. ARTSDALEN
Now there are those who believe that the dollar will
eventually just quit plummeting & reverse its course & start
climbing higher again. But it cannot because already the debt level
has reached an untenable position. And 2005 may just be the year
foreign central banks make the crucial decision to quit supporting
the US debt because the price for their own country to continue
to do so is just too high.
And you are still debating getting into gold equities?
Now might be an excellent time to get on board before the mad rush
that is destined to occur in 2005. Yes, 2005 should prove to be
an interesting year.
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Gold Letter, Inc.
December 24, 2004
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