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Daily Digger - Friday April 15, '05

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Gold Majestic - holding to 91 XAU shows great courage and conviction. :)


Seriously, I don't follow charts much, but the charts I pulled on the HUI look about as Dover Sole as anytime in the past 3 years. So we ought to at least get a bounce in the next week or so to enable folks to get off the train.


Then again - we could bounce straight on up to XAU 155 like IKE said. :lol:


"shows great conviction and courage"?

More like a deer frozen in the headlights of an oncoming Mack truck.


Seriously though, I'm a long term investor with the majority of my investments in a fundamentals driven, diversified core portfolio added to on "TA identified" dips. My "trading portfolio" suffers when I become too busy with other endeavors or just plain careless. Unfortunately, the more succesful I've become, the more careless I've been with my trading portfolio. Fortunately, in a bull market, mistakes are often forgiven in time.


Fundamentally, I've been in the camp for several years that sees a continuation of the growing deficits which is long-term dollar bearish. I see the increasing reliance of foreign central bank money inflows colliding with their higher commodity and energy import costs and diminishing national surpluses (Japan). This collision will produce rising long term rates negatively impacting stock and bond markets, the dollar, increased volatility and lead to debt-impaired economic recession, rising prices for certain kinds of goods and services, lower prices for assets affected by deflating bubbles such as certain categories of real estate, higher gold price / gold stock prices. Soon the Fed will talk up the deflation scare again bringing an end to the 1/4 point rate hikes and giving way to rate cuts once again.


Yes, energy/commodity prices are correcting but will remain high going forward as competition from 40% of the world's population living in China and India alone, and other emerging world economies continue to grow, consume and stockpile even if at reduced paces.



When the US consumes 6% more than it produces on a sustained basis and must rely on 2 billion a day from foreign CBs to inject primarily into our bond market to keep long rates from rising, our stock markets from falling, the dollar from free falling and commidity prices from soaring, you know America has a problem. A problem similar to the Stagflation of the 70s only this time much worse. My belief is that the majority of people don't change until they're forced to by necessity, i.e., no soft landing on this one. The fed has its hands tied and will try to minimize collateral damage at best. Inflows from foreign CBs are on the wane and after the short-term dollar short covering is over, the dollar will continue its decent.


I view the Gold Juniors as call options on gold in the ground, especially a diversified basket full of Canadians with reserves outside of Canada in relatively safe areas of the world. You get the best of both worlds, a strong Canadian currency hedge and low cost production.


Understand the fundamentals, expect price volatility, and sleep well at night.


Goober out B)





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Well said Majestic - I was teasing you about the courage. :)


I am long term as well for just about all the same fundamental reasons you stated. This is going to require patience, and the sleeping is not going to be easy, especially in nasty corrections like this, which are a real test of one's conviction.


I'm starting to hear predictions now of HUI 150 and XAU 75, similar to the last time the we went throught this. I am concerned with the speed and depth of this decline, but some of this stuff is getting too cheap - especially in relation to the broad market.


Short term, either we bounce from around these levels or the POG starts to catch up with the miners and starts its' decline in earnest.


It will be interesting to see if we get a stick save in the broads tommorrow.

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