Metals on the run
Contributed by Olaf Sztaba
NA-Marketletter
www.na-marketletter.com
June 7, 2004
INTRODUCTORY
SUMMARY:
Gold and gold stocks continue to work off the excesses of the
last rally. Without doubt, the way the correction in the gold
sector is proceeding may cause many goldbugs a great deal of
disappointment. It shouldn't. History suggests that when a group
generates leadership in a bull market, it usually persists through
the entire length of it. Having said that, we believe that gold
and metals in general have another year or two to go, at least.
GOLD NOW: In our last Market Comment we stated that: "Every
correction should be an occasion to refresh and fill up before
another leg up." Indeed, those who took advantage of
the last sell-off and filled their portfolios with gold issues
are already enjoying healthy gains. Is it going to continue?
Yes and no. Yes, because we are acting within a long-term bull
market in gold. No, because in the short-term, gold and gold
stocks may require further stabilization before another up-leg
commences.
Gold has staged an impressive comeback lately. Gold bounced back
from the resistance around $380 and moved up decisively, moving
close to the $400 mark. Please note that the yellow metal's advance
stopped short of the 50- and 200-day MAs. From a technical standpoint,
the latest mini-run could be a reaction to a dramatic decline
and should not be viewed as the beginning of the next major up-leg,
not just yet. There is a strong possibility that what we saw
was just the test of the averages and the corrective move will
continue. There is, however, one problem in this analysis. Gold
is in the cyclical and secular bull market, thus surprises are
most likely to be to the upside. As a result of this, we believe
each drop in gold and gold stocks should be viewed as a buying
opportunity.
In addition, please note that the February-August period is usually
not the best time to invest in gold. Conversely, September-February
is historically the period when the golden bulls can act the
most.
In sum, gold tried to force its way through the 50- and 200-day
MAs. It couldn't. As a result of this, gold may make one more
down move. It should create a perfect buying opportunity of the
best-priced leaders of the golden bull.
A SECULAR (multi-year) PICTURE: Over the long-term,
gold and gold stocks should continue their leadership. The on-going
bull market behaves like a snowball. The beginnings are usually
inconclusive and slow. As the secular bull market progresses,
the bulls become more aggressive. We are still at an early stage
of the bull market in metals. The advance, so far, has been elegant
and well-crafted, but expect it to change soon. The next big
up-leg in gold and gold stocks may be much more dynamic as the
general public will try to join the bullish bandwagon in metals.
Many investors still ignore the bull market in metals at their
own peril. The secular bullish force in gold is already unstoppable.
Accept it and use it to your advantage or be eliminated from
this game for many years to come.
For individual gold stocks recommendations sign in for a
free trial at www.na-marketletter.com
Contributed by Olaf Sztaba
Email: osztaba@na-marketletter.com
Website: www.na-marketletter.com
About NA-Marketletter
321gold Inc
|
