Gold bulls break loose By Robin Bromby 30apr02 (The Australian)
GOLD bulls are off the leash and running amok. After years of false dawns, it now seems possible all their prophecies may be fulfilled at last.
The tone of their newsletters and websites is noticeably changing from voice-in-the-wilderness to triumphal. They just might have been right about what they saw as the inevitability of gold rising, some time, some how, but fast.
Their arguments were several: the physical shortage of gold being unsustainable despite central bank sales; or how the genie would be let out of the bottle when the short sellers were confronted by a sharp upward tick; or how in bad times people would stop trusting paper money and turn to the yellow metal (as they are doing in Japan).
"The next phase will take us to the old high of $US850," says Robert Chapman of The International Forecaster.
Ned W Schmidt, publisher of The Value View Gold Report, has his long-term target as $US1252 an ounce (and has just published a 150-page report to argue the case).
For the moment, they'll have to be content with $US312.50/oz – the price of gold in Asian trade yesterday.
Gold rallies over the past two years have been short and sweet. This one certainly has a different feel about it, with the metal's price having surged again after each pause during recent weeks.
Clif Droke, whose The Bear Market Report is well known to those of that investing frame of mind, says gold has now broken out of its "triangle consolidation pattern with parameters roughly between $US290-$US308".
He's predicting a break to $US325, although he allows for another – but shallow – correction at some time.
Jay Taylor, editor of J. Taylor's Gold & Technology Stocks, says the gold stocks he recommends have risen an average of 85.15 per cent since the start of 2002.
The International Forecaster says that it's not only Japanese buying gold at present – so are Arabs, Russians, Chinese and many others.
The Forecaster is a believer in the gold manipulation theory: that the big hedge funds and merchant banks have such enormous investments in short-selling gold that they've been using their muscle to keep prices down.
"The gold cartel must be having fits," it says. "Resistance at $US305 and $US307 has been broken."
Another well-known forecaster of bad times ahead, Ed Bugos of The Goldenbar Report, is one of many people (including Morgan Stanley's respected Stephen Roach) who believe the US dollar is heading for a fall because of an unsustainable current account deficit.
"As for what is behind the breakout in gold, it isn't Argentina, or France, or Japan for that matter. Those are all just parts of the puzzle.
"It's the dollar, stupid!
"There is no question in my mind that rising gold prices are forecasting a breakdown in the US dollar,"
And who's confident enough any more to dismiss such views?
