July 5, 2022 

Gold Enters Major Bull Market


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 By Michael Miller

05/18/2006  7:26AM

Thought I would take a few minutes to comment on an AP Business article published Monday May 15, 2006 from New York and in the Sacramento Bee, sent to me by a shareholder. Madlen Read, writer, puts forth the following.

1. “Gold’s latest rise is the result of fear.”
2. “It’s a dangerous market because the fundamentals mean nothing.”
3. “Demand for gold has grown faster than supply.”
4. “Physical gold is an option. It’s not, however, the most practical vehicle for most people. There are costs to store and insure gold bullion, so it’s really only a good idea for those with a lot of money to invest.”
Madlen, please do some critical thinking instead of repeating decade old opinions grounded in ignorance. You as well as most business journalists are well behind the curve of understanding how gold behaves and why. Most people, including myself, are very cautious when commenting about the under belly of the gold market. Its mystic has continued for 6000 years. Some opinions are just not true.

Fear is not driving the rapid increase in price. Fundamentals are as important to understand, as are technical facts. Econ. 1A or 101 teach the basics of the relationship of supply and demand on prices, nothing newsworthy here. It costs nothing to store gold. It does not need to be insured because you can bury $25,000 worth or more in you indoor plants. It will be safe from fire or other accidental occurrences. If you do not brag about your stash, no one will steal it, which is one reason some people, companies or groups own gold. It is the most private and liquid asset in the world.
 By bluejay

05/11/2006  2:29PM

This is the final word for the time being:

The following are statements made by Mr. Jim Sinclair today on his website at http://www.jsmineset.com:

"Forget the why. The gold price is doing what it is not because of fundamentals, technicals or geopolitics. The price of gold is acting the way it is because the market wants 1650 and will do it when it wants, not when some advisors tell it to.

Reactions when they come will be more spectacular than the rise."

Mr. Sinclair's advice is to buy into reactions.
 By bluejay

05/10/2006  10:44PM

A news report by MarketWatch could explain the reason for gold's strength recently.

"Moves by Venezuela and Bolivia to nationalize their countries' natural resources could soon spill into the mining sector, likely boasting prices for metals that are already at multi-year or record highs, while pressuring companies with interests in Latin America."

Value View Gold Report says "A great leftwing, socialist rising is occurring in Latin America, which will push higher all mineral prices."

Ned Schmidt goes on to say, Venezuela and Bolivia are only the beginning."

Indeed, early this month, Bolivian President Evo Morales said the move to nationalize the country's hydrocarbons sector was just the beginning. "Tomorrow it will be the mines, the forest resources and the land", he said.

"The greater concern is potential spillover to Peru" which is a major producer of gold and copper, said John Hill of Citigroup. Peru produced 207.8 metric tons of gold in 2005 or 8.2% of the world output.

The full story entitled "Gold markets eye Latin American moves" is available currently at Kitco.com
 By bluejay

05/10/2006  6:46PM

In January of 2004 the U.S. dollar was about where it closed at today, .84 on the Index. In January of 2004 gold was at $400 an ounce. Today's close in gold is over 75% higher than it was in 2004.
 By bluejay

05/10/2006  2:11PM

The last on gold is $708.10.

The price of gold is indicating that there is a serious problem that may be getting ready to surface.

The problem with the U.S. dollar is old news. Is the Iranian situation on the verge of exploding? Will there be company failures for those who have heavily shorted gold bullion. Has the FED been involved in selling gold and has it turned against them? Do we really have all the gold in Fort Knox and in federal reserve banks that they say we do? Something is wrong.

Gold is doing in days what it should have been doing in months, maybe weeks.

Gold has unexpectedly vaulted past big resistance at 682. Unfortunately, you can throw the charts out the window for the time being. Gold is a real animal now, growing stronger as it moves higher.
 By bluejay

05/10/2006  8:50AM

The deepest gold mine in the world is the Tau Tona owned by AngloGold Ashanti in South Africa. The mine workings extend 2.3 miles below surface.
 By bluejay

05/06/2006  2:01PM

Another surprise, this time from Berkshire Hathaway.

Warren Buffett said at the Berkshire Hathaway annual meeting that he didn't make any money on his silver investment because he "bought it very early" and said "he sold it very early. Other than that, everything I did was perfect."

In 1998 Warren Buffett bought for Berkshire 129 million ounces of silver. The price paid was over $500 million and probably cost him about $3.90 an ounce.

Silver closed Friday at $13.90.
That's $10 an ounce profit not realized. $10 times 129 million ounces of potential silver profit would have been $1,290,000,000.00. Now, that's a real big mistake.
 By bluejay

05/04/2006  11:18AM

Barrick Gold made a surprise announcement with their first quarter earnings report filed yesterday.

Barrick stated that their corporate gold sales contract positions(forward gold sales) have been reduced by a shocking 4.7 million ounces. As of 5-03-06 a total of 5.7 million ounces of forward gold sold have been squared away.

Barrick intends to reduce their hedged forward gold position by another 2.0 million ounces by year's end. Barrick further stated that by the end of 2009 they will have eliminated their entire gold hedge program.

Barrick in the past has been accused of contributing to gold's long bear market with their excessive forward gold sales. Gold ultimately bottomed out at just above $250 an ounce some years back.

An appropriate question is, why did these gold companies cover their gold hedge programs so late. I guess they don't read our Forum pages.

Some years ago Mr. James Sinclair of http://www.jsmineset.com took out full page adds for all gold companies to read in mining trade paper's and in Barron's that gold was heading up and that gold hedge programs should be terminated.

Do you remember the story that, "you can lead a horse to water but you can't make him drink"?

One only has to wonder why it took these guys so long to cover?

Included in Barricks buy back were the gold short positions incurred by Placer Dome which they recently acquired.

Placer's loss for their share of the past forward gold sales in the quarter was $1.2 billion and in the time following the first quarter was $814 million. That's a staggering $2 billion plus in losses for the Placer position alone.

Does anyone remember that some of the seed money to get American Barrick originally started came from Saudi Arabia?

Does anyone remember that George Bush senior was a board director at Barrick?

American Barrick was put in place to control the price of gold. It is obvious by their throwing in the towel that there is no stopping gold now.
 By bluejay

04/19/2006  12:19PM

Last on gold is $640. I know we're in a bull market and I know it is healthy to react but this current move is very very impressive.
 By Rae Bell

04/19/2006  7:56AM

How about that gold price? The london fix is $624.75 today!
 By bluejay

04/16/2006  9:54PM

New Delhi, April 16, 2006
Press Trust of India reports from Assocham's Paper on "Yellow Metal: its Future Pricing Trends" that

"gold demand world over had reached at around 4,000 tonnes per annum against its supplies which remained stagnant at about 2,250 tonnes per annum."
 By bluejay

04/10/2006  3:02PM

The last on gold is $599.60 after hitting $600.70 in the after hours trading market. The current trading range on gold is about $530 to about $610. The probabilities favor gold moving slightly higher followed by a selloff. This is all normal and to be expected.

Supporting gold's recent strength has been the run-up in the price of silver. The last on silver is $12.72. Seven months ago silver was under $7.50 an ounce. Silver still possesses the ability to trade near $14 an ounce on a short term basis.

Most importantly for the gold and silver stocks is the fact that the Philadelphia Gold & Silver Mining Index is suffocating its shares at the 150 level on the chart. These stocks are weak and are currently laboring for strength just under this level. In the past 20 years the 150 area on the chart has ended all intermediate uptrends as they approached and traded partially through.

As gold, silver and their related shares appear temporarily inflated, this appears to be a suitable time to bank extra funds and await lower prices during this generational bull market in gold and silver.
 By agnewjim

04/05/2006  11:17PM

Concerning the Iranian Oil Bourse (exchange) that was to have exchanged oil for Euros instead of Dollars, it has been postponed for some reason (it was to have begun on 3/20/06). There was some discussion of this at the web site www.fmnn.com (Free Market News Network), although you may have to search for it.
Jim Agnew
 By Michael Miller

02/17/2006  7:31PM

HI DEBBIE. Your registration and e-mail is authentic and I assume your questions are as well. Unfortunately, I cannot answer them from memory and maybe there are no answers to some of your questions. Here is a little insight.
I SOLD GOLD today, but it will not be registered in any media or publications. The same is true for other gold producers. While returning to Alleghany in my truck, a caller to radio program said that Iran was rejecting the dollar as currency in March. No one called to challenge this statement. I have no idea if it is true. A while ago I wrote about the Dubai gold exchange that opened in November. I felt that a new player had entered the gold business with much wealth and it could be one factor in the rapidly escalating cost of an ounce of gold in dollars.
FOR THOSE PEOPLE who believe that a global war is underway, economics have always been an issue in war. Gold has a long history of economic value in trade. Maybe this is a reason the Feds have an interest in gold. Remember gold like dollars is used to establish exchange values. Just a short time ago I had to sell an ounce of Sixteen to One bullion for $250. Now I can sell that same ounce for $560. What has changed? Is it more than the dynamics of supply and demand? Unlike most other items of barter, gold’s intrinsic value is recognized the world over, especially by foreign producers of oil. Compare this to euros, the yen or dollars. Remember the Swiss franc? We do not hear much about the Swiss franc in the news today.
I HOPE SOMEONE else can answer your tough questions. Gold is very private. The Sixteen to One mine holds many ounces left to mine. Personally, I am very comfortable owning this American gold deposit. This is why I became a shareholder in 1975. Gold is here underground and ours to mine.
 By Debbie Clark

02/15/2006  1:15PM

I always read Bluejay’s entries. Thanks for putting yourself out there. Keep it up. Do any others out there try to look ahead to market conditions? If so, here are some questions I wish I knew answers.

How can I find the volume of gold trading other than the gold future reports? Who and how do the large producers sell their gold? How is gold sold in South Africa or foreign countries? Is it all just bookkeeping entries or cash exchanges? Are the central bankers selling off inventory or have they announced plans to?

What were people doing about gold (raw speculation okay)when the price was $260 an ounce a short time ago? Do any people or institutional investors buy gold to hold for the storage of wealth? Would love to read some fresh knowledge about gold and how it is important.
Why does fed reserve even care about the future of gold? Maybe because of fear of gold undermining dollar as the world's money, which is not likely because gold is harder to pass to others than paper or coins.
 By bluejay

02/15/2006  6:16AM

Professor Bernanke, Alan Greenspan's replacement at
the FED, will make his first public appearance today
in front of Congress on the state of the U.S. economy
and the future of interest rate policy.

Expect the Exchange Stabilization Fund to be in the market today attempting to destabilze gold's price lower. They may have some luck as short term resistance is nearby at 546.

Overall, expect the trading range on gold to be from about 535 to a high of 590 over the weeks ahead as gold continues to move higher during this generational bull market.
 By bluejay

12/14/2005  8:23PM

Gold is currently selling at 504.80 in overseas markets tonight after trading at 502.60 earlier in the session. Monday gold hit approximately 540. This current selling wave is just part of the overall personality of gold during bull markets. Currently, gold is down 6.66% from Monday's high.

The current collapse in gold's price is pale compared to what happened in late 1978 before gold exploded to approximately 900 an ounce the following year. Over a period of weeks gold dropped from the 260's to approximately 200. This short term weakness amounted to a 23% decline.

There is no doubt that soldiers of the paper factory will be pushing for gold to break 500 and hope for a general panic to set in. According to Jim Sinclair when gold is manipulated lower in fast breaks the big Asian buyers play their game by withdrawing bids for awhile only to put in much larger bids lower down. This is what eventually halts gold's fast downside breaks. At some point the sellers from the paper factory are overwhelmed by a mass of funds flooding into the gold market and they quickly retreat. Mr. Sinclair has estimated that gold's selloff will end in the area between 488 and 496.

Will a 23% selloff repeat itself like it did in 1978? The answer is no. Over the past three years the following are the major intermediate percentage drops:

2002 21%
2003 16%
2004 13%
2004 9%

It is quite clear from the shrinking percentage drops that gold is tooling up for some fast action to the upside in the time period ahead. Once this decline is over, fasten your seat belts.

A point of interest: The major gold stocks are currently at their best relative strength figures in many years against gold. If the gold stocks remain reluctant to join gold's weakness in a meaningful way, you can be rest assured that they will lead gold up on the next major push.
 By bluejay

12/08/2005  9:51AM


The top channel line is 520 and not 515. If gold can stay above that level it will be extremely positive and the precious metal will enter its second bull stage of greater price appreciation.

In the meantime, it would not be out of character for gold to go into a price correction lasting from weeks to up to a few months.
 By bluejay

12/05/2005  12:11AM

Gold's last bid price in international markets tonight is 505.40. The high in earlier trading was 508.60.

Gold's current chart position is near the top of an ascending monthly channel formation. In the past few years this ascending higher parallel line has temporarily defused gold's intermediate term energy bursts for the following two to four months.

It would not be surprising to see gold exhibit some short term weakness during the next few months. This foreseen weakness, if it develops, will be just another buying opportunity in this major bull market.

If gold decides to trade above 515, the top of the monthly channel and stays above this area, the old monthly chart formation will prove to be the stepping stone for the start of the second stage of this three year established major bull market. During this second stage prices will move up faster and the declining swings will be scary for the inexperienced.

Unfortunately for the holders of gold related investments, today the Sunday Times in London took a few shots at Gold's recent strength. This is all to be expected from supporters of the paper factory. It wasn't too long ago that England sold their people's gold at under $300 an ounce and now the current price is too high?

These guys are on the wrong side of the market. First, they have no business selling treasury gold and secondly, they have no business calling tops in a bull market that they sold like ignorant fools much lower.

If people are intested in gold's full potential they need to read Jim Sinclair on a daily basis at http://www.jsmineset.com or obtain his DVD entitled THE CASE FOR GOLD. Scroll back in this section to find out how to acquire this historical DVD.

Jim Sinclair is the source of the truth for this once in a life time generational bull market in gold that will last for the next five to ten years.
 By Michael Miller

11/30/2005  4:11PM

Purists know that stock markets are driven by the technical considerations or the fundamental considerations. The advent of television started the broadening of the role of the stock analyst has led to the “gold expert”. Today, we have gold opinions coming from many directions. How does the reader know if the opinions offered by the writer “expert” are believable? One way is to become familiar with their personal background and disclosures. This is something that Bluejay does when he references Mr. Sinclare or others. He knows their background.

I shortened the following from a lengthy article written by a gold expert I trust. I asked his permission in a letter that you can find in the FORUM under Correspondence from the President. I received no answer but fell you should read this man’s opinion.

2005 Jackling Lecture


“ For his outstanding achievements as a mining executive and philanthropist; in particular recognition of his ability to consistently provide superior returns to the shareholders of Newmont Mining and Franco-Nevada Mining for more than two decades; his generous contributions to higher education with focus on mining careers; his always energetic and productive ability to creatively challenge the status quo in the mining industry; and for his lecture: “ Gold: A Lesson in Monetary History.”

Recipient of the 2005 D.C. Jackling Award


Gold has two interesting properties: it is cherished and it is indestructible. From the very early days of civilization in Egypt 4,000 years ago, gold has appeared as a constant for the appreciation of beauty, the storage of riches or the exchange of goods or services.
In that respect, gold can be melted down but the process never damages its chemistry or weight. Gold never disappears. It does not tarnish, oxidize, or burn. Every ounce of gold ever produced still exists today- somewhere, all 136k (15,000 st) of it. As money, it is not an IOU or the obligation of something else.
Gold’s value over time has been a reflection of our civilizations. Humans have fought and died for it. We have expressed our love and admiration with it. And we have created wealth with it and preserved it for future generations. It is The Gold Constant.

The 20th century
Looking back at the 20th century, there have been two major influences on the gold price. On the production side, it’s the total dominance of South Africa, where some 46.65 kt (1.5 billion oz) of gold came out of South African gold mines in the 20th century. That is 40 percent of all the gold ever mined. The Witwatersrand Basin stands as one of the greatest natural resources ever discovered. However, this resource passed its peak in 1970 when South Africa produced more than 995.3 t (32 million oz) in that year. Today, its production is about 404.3 t (13 million oz), down 60 percent and falling.
The other major theme is inflation and its corollary, the depreciation of the value of currencies. At the dawn of the 20th century, Britain was at its apogee. The Pound Sterling was anchored to gold and there had not been any appreciable inflation in commodity prices in 200 years. Imagine the price of a loaf of bread was the same in 1914 as it had been in 1717. That was to change dramatically in the 20th century.
In 1971, the price of a barrel of oil was $2.71. By 1973, it had increased to more than $12 per barrel, a five-fold increase. We had a full-blown energy crisis on our hands. By 1978, the price had reached more than $40 a barrel. And every one believed it was only a matter of time before it reached more than $100 per barrel. Because the world economies were very energy intensive, the price rise was very inflationary.
Fast forwarding, in 1988 oil bottomed at $12 per barrel. Since then it has increased over four-fold to more than $50 per barrel. Yet inflation is still tame. Or is it? The perfect conditions for higher inflation have been in place for the past year or so: high oil prices, a weak dollar a very stimulative monetary policy and accommodating fiscal policy. Yet the official government indicator, the consumer price index, which has not shown much of a concern. It does not help that most people think that the consumer price index is a “ massaged, fudged, and assumed seasonally adjusted, figment of some bean counters over-active imagination.” We are paying more for gas at the pump, housing, medical services, restaurants and football games. On the other hand, the microwaves we purchase from Chine have fallen in price by 50 percent, as have most electronic products, clothes and 70 percent of the “stuff” sold at Wal-Mart. So who is right? It is a bit like having your head in the oven and your feet in a bucket of ice. On average, the temperature is just fine, but it is hard to tell.
In 1971, President Nixon had to make a choice. He could keep the dollar on the gold standard and see the U.S. gold reserves melt away as France, England and other European countries wanted to redeem all their dollars for gold. Or he could close the gold window and let the dollar float. He chose to go down the slippery slope of inflation. He chose the politically expedient solution: allow the dollar to float. The currency plunged and gold soared. It went from the fixed $1.12/g ($35/oz) to $2.90/g ($90/oz) in a matter of months. As inflation ratcheted higher, the gold price followed.
From 1970 to 1978, the dollar lost about 50 percent of its value against the German Mark and Japan’s Yen. Faith in the dollar reached its nadir in 1978 when the Fed issued the infamous Carter bonds. As the world did not want any more dollars, these bonds were denominated in German Marks and Japanese Yen. Gold soared even higher, reaching more than $25.72/g ($800/oz) in January 1980. A rise of more than 2000 percent. The world had never seen any thing like this. It had lost faith in the dollar and rediscovered the role of gold as the ultimate currency of last resort.
As we enter the 21st century, the major differences from 35 years ago are the following:

The savings rate. In the 1970s, the U.S. savings rate was around 8 percent. Today, we are in the 1-percent to 2-percent range. I call that negligible. If you do not save, you do not have any money to invest. And so it is today that all our investments are paid to foreigners. In effect we are selling 1 percent a year of our economy to foreigners. Not a healthy situation. As the boomer generation begins to contemplate retirement, they will have to change their behavior. They will have to save more and that could have a dramatic effect on the economy.

Debt. In the 1970s, the total debt in the economy- personal, corporate, and government- was 130 percent of the nation’s gross national product. Today we stand at a towering 210 percent. The last time it was that high was 1933, when national income had fallen by 33 percent. This is not a good sign, particularly at a time when interest rates are at an all time low. Whet will happen when interest rates inevitably rise? I shudder just thinking about it.

Inflation (or the lack thereof). In the 1970s, labor had an inordinate amount of power. It was able to extract huge wage gains that pushed inflation in a viscous tandem between cost-push and demand-pull. It took Fed chairman Paul Volker, with sky-high interest rates of more than 20 percent, to break the back of the inflationary spiral. Today, China, India, and much of Asia are exporting deflation, not only in manufactured goods, but also in wage deflation. China has 18 million workers moving to the cities every year looking for work at $5 a day or less. The good they produce are exported worldwide and compete with local goods that quickly become over priced. The result is that the local manufacturer closes its plant, resulting in massive lay offs at home. The manufacturing sector in the United States has lost millions of jobs during the past ten years because it cannot compete.
The choice that President Nixon had to make in 1971 is made daily in the foreign exchange market and the offices of the Central Banks of Japan, China, Korea, ect. In fact, we have seen the first major cracks appear. South Korea, the fourth largest foreign holder of U.S. dollars, announced earlier this year that it would start diversifying its holding with other currencies. Earlier, Russia quietly made the same decision. It is only a question of time before China and Japan, the two 800-pound gorillas, to come to the same view. When they finally move, the ground under the dollar will shake and then part. Gold is up almost 80 percent but I do not think that’s the end. Far from it, and here is why.
My view is that we will see a return of gold as currency. The launch in November 2004 of the gold exchange traded fund on the New York Stock Exchange is the first step in that direction. This instrument brings a new, easy way for people to own gold. And in less than a few months, more than 280t (9 million oz) of gold had been purchased through this fund. This is just the beginning. Investors, pension funds and institutions will come to a point where they will use gold as an asset class diversifier.
Gold is the only currency that is not the debt of some one else. Let me say that again, gold is the only currency that is not the debt of some one else. It has intrinsic value, unlike currencies that are only as credible as the state that issues them. That is why gold has had such a fundamental role in financial history. And history repeats itself. I suspect that gold 20 or 50 years from now will still have the same purchasing power as it has today. I do not know that I could say the same for the U.S. Dollar. That is why we call the yellow metal “The Gold Constant.”

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