Conversation
with Gold
(part 2)
Olaf Sztaba
Olafinvest
Research
Posted July 24,
2003
Just the
other day we were lucky enough to talk
to gold itself.
Here is the second part of our conversation:
Olafinvest
Research (OR): Let's discuss your most recent moves. Can you
remind us what you did recently?
Gold: In February I celebrated
my three-year old rise with a sharp advance in the proximity
of the $375 zone. You have to admit, I have done an amazing job
during the last three years and it should be no surprise to anyone
that I needed a break. I was not sure whether to take time off
in February or May, so that's why I rallied again towards the
$375 zone in May.
OR: But it looks as though
you had already made a decision to take a break in February,
hadn't you?
Gold: You are right. From
today's perspective I see that it was certainly the right moment.
As you can see, my intermediate-term MACD produced a sell signal
back then. In addition when I rallied three months later, there
was a visible divergence on the MACD. Also, since February, my
relative strength line was showing the first signs of fatigue.
OR: When can we expect
the indicators to turn bullish again?
Gold: I haven't made up my
mind yet, but watch me in August and September or October. Maybe
I will drop into my office during that time.
OR: What do you mean, "drop
into" to your office?
Gold: As I said during our
first interview, I have been working hard in the long-term. I
started a secular bull market. Please note that even though (in
the long-term) I am heading north, I may want to take breaks
occasionally. Now is one of those moments. You just have to be
patient.
OR: You haven't answered
my question. What do you mean by "Maybe I will drop into
my office?"
Gold: OK! I am now on a well-deserved
vacation but, as I said, I may occasionally want to work a bit.
As you have noticed, the stock market is currently in a cyclical
bull market. Now, after two or three months of correction, it
may have its last run somewhere at the beginning of next year.
So, when it is correcting, I will jump into the pool and maybe
rally here and there.
OR: You suggest, then,
that the current bull market in equities will last until the
first part of the next year and during that time you are going
to be on vacation.
Gold: I suggest exactly that.
OR: So when do you expect
to start another major leg of your bull market?
Gold: As soon as the stock
market goes back to its secular bear environment, I will be back,
big time.
OR: Until then?
Gold: O come on! You have
nothing to complain about. Even when the stock market was going
up, I held on pretty well. Look at my chart. Yes, my friends,
gold stocks have experienced deep pullbacks but take into consideration
that there is a lot of nervous and amateur capital out there.
Secondly, look
at the main gold stocks' indices like the HUI or the XAU. They
climbed almost to the proximity of their 52-week highs recently.
Those guys did even better than I did recently. Is it that a
good harbinger?
OR: Yes, it is. Let's
talk more about gold stocks.
Gold: Sure, what do you want
to know?
OR: Are they going to rally
or not?
Gold: Don't expect me to
give away everything. By doing that I would kill this game. Let
me just say this. Many gold stocks, especially small junior companies,
were hit very hard during the recent breakdown. They did not
deserve this kind of treatment for sure. Remember, they will
rally again and today's prices may be hard to get in the future.
When I start another up-leg, I am not going to take any vacation
for some time, I can tell you that.
On the other
hand, you have many gold stocks that are holding magnificently.
The fact that they are trading near their 50-week highs means
something.
OR: Could you give a few
examples of stocks that are holding well?
Gold: Look at Eldorado Gold, Golden Star, Nevsun Resources
- and Wheaton River is doing an excellent job.
OR: Do you think investors
should get into those stocks now?
To be continued
......................................
Let's keep it simple. It's all about supply and demand.
Olaf Sztaba,
July 10, 2003
E-mail: olaf@olafinvest.com
Website: www.olafinvest.com
About Olaf Sztaba
Important
note:
We would like to give credit to Ron Meisels, President of P&C
Holdings, who first came out with this kind of presentation.
________________
321gold Inc Miami USA
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