Rick's Picks

Gold Taunts Meek Buyers

Rick Ackerman
Monday May 1, 2006

Excerpt from Rick's Picks (website).
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While I've expressed mild skepticism in the past that an ounce of gold will eventually change hands for $10,000, there is no longer much room to doubt that the old high at $850 is destined to fall. How long it will take for prices to blow past that peak and hit $1,000? Count me among the lunatics on this question, since I think it's going to happen well before the end of the year and perhaps even before autumn.
 
How can I be so sure? Simply because of the way gold's fleeting lows continue to elude hesitant buyers. Clearly, many would-be investors are holding back in hopes of significantly lower prices. This is simply human nature. After all, if they couldn't bring themselves to buy the stuff at $400, or at $500, how can they possibly justify paying $656 for it today?
 
So, these johnny-come-latelies continue to wait for a BIG correction. Not just a $40 selloff like the one we saw a week or so ago, but a full-blown avalanche that presumably would bring gold down to "affordable" levels in just a few short weeks. A word of advice: Don't hold your breath. Gold might sell off hard for a few days, or maybe even chop lower for a week or two, but that will be about as good as it gets for bargain hunters.  And here's some more bad news for procrastinators: Even when bullion does get slammed, it will never come down to whatever levels you thought would constitute a "bargain".
 
(Click on chart to enlarge)

It's a seller's market now and you had better get used to that fact, since it's going to be that way for a while to come. Take a look at the chart above, which shows how the bull market unfolded in JDS Uniphase, a tech-bubble favorite. For the most part, you either bought the stock when it was rising or you didn't buy it at all.
 
As we now know, that bubble was sustained mostly by empty promises, fatuous ideas and much hot air. Imagine what an investment bubble would look like if it was built on companies that are literally sitting on gold mines! There should be little doubt that when the bull market in gold has run its course, it will make the dot-com boom look like a church rummage sale. Whether you buy now or buy later, an ounce of gold is going to "seem" very expensive for a long while to come.

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Rick Ackerman
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Information and commentary contained herein comes from sources believed to be reliable, but this cannot be guaranteed. Past performance should not be construed as an indicator of future results, so let the buyer beware. Rick's Picks does not provide investment advice to individuals, nor act as an investment advisor, nor individually advocate the purchase or sale of any security or investment. From time to time, its editor may hold positions in issues referred to in this service, and he may alter or augment them at any time. Investments recommended herein should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Rick's Picks reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscribers' initials will be used unless express written permission has been granted to the contrary. All Contents ©2005-2006, Rick Ackerman. All Rights Reserved. You can subscribe here.

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