Dear Jim,

How is it that gold appreciates strongly today and across the board PM shares either did not react to any significant degree or, like the clear majority, actually declined. What does this means for the future?

Dr. Bob

Dear Dr. Bob,

This morning I received a scathing fax from a person who was not principled enough to have either a return fax number or email address. He praised the GS prediction. He panned gold and insulted Dan, Monty and me. Perhaps that throws some light on your question.

The short hedge fund traders have won so long as they continue to sell “good news”, “strong news” and “spectacular news” to keep holders of gold shares demoralized. As such the demoralized share investor is apt, like this morning's fax, to throw away good situations. Now as a sold out bull, this writer screams vehemently as a gold bear.

Gold is up strong today but many now sold out bulls, as is the case with this morning's fax, do not believe the rise in gold and therefore think they are slick to use it to sell shares.

Buyers of shares are now limited to those that know the fundamentals of what they have, seeing the opportunity those situations represent.

As far as the future:

PM shares will benefit from the higher price of gold. No commodity based entity, well managed, will fail to reflect the increased value of the commodity they represent.

Gold is going to rise to $1050 and thereafter $1650.

Business activity slowing is positive to the price of gold via its impact on the US dollar. Click here to review the Formula.

The misunderstanding is being promulgated by respected senior gold citizens that a decline in the equity market is bad for gold shares. That is true only as it scares the gold stock holder who is, more likely than not, a bear on general equities. Gold shares will follow the gold price more than the equity market. The dollar drives gold in the inverse. Therefore for the gold investors the price of gold shares will be driven by the lower dollar and not by the equities market moving higher or lower.

In short, gold share holders should not be panicked by every written word that speaks against them while paying no attention to any written words that speak for them. Gold share holders need to stop looking for pain and begin to anticipate bliss.

In time gold shares will appreciate by orders of magnitude.

Regards,
Jim