Goldcorp

Charles Cohen

I realize that these kind of days are the most difficult to put on a happy face, but the last phase of this correction has the earmarks of almost all of the other final gold share bottoms. For those who have been in the battle since 2001, and can look back perhaps with some pain but also with some satisfaction, at the bleakest points along the way, we should recognize the past 10 days or so for what they really are.

I have included three different charts of Goldcorp (GG), a 10 year one, the one year and the one month views to show what I mean. These three give us three different perspectives of the same pattern. I prefer to use GG because it represents the best of the quality of the gold companies--was and still is.

Let's go back to the beginning at the start of 2001. GG started its first ascent from a long decline and basing pattern from about $2.50 to nearly $12 or nearly 5 times. But after this huge move almost out of the blue, GG corrected, or more precisely crashed in June 2002 when it fell 40% in ONE WEEK. Then after almost tripling from that point, in 2004, it fell almost 40% back down to $10, only to rise 400% in two years.

Now to the one year chart. We can see the final sell off from last August when GG collapsed from around $28 to slightly above $21, only to more than double over the next 6 months. It has been correcting since then. In the final stage of the drop in 2007, Goldcorp had 3 sizeable gaps down as the panicky holders were getting out before the stock broke $20. Of course, in hindsight that cemented the bottom not the break. A 30% drop in one month is a sizeable loss, and very scary when it is happening. The problem is that at bottoms we get very emotional and tend to lose our confidence, and worry that the stock might drop even much further, rather than seeing it as the sign of a bottom, which that selling became.

Do you see the pattern? We have been in a giant BULL market that behaves differently as we might assume. It is not the kind of market we see in the regular stocks which never seem to go down, but then again never seem to go up. From 2001, even with all of these dramatic declines which undoubtedly frightened out many holders, Goldcorp has gone up about 1400%. I am certain that very few have held on to the shares for this entire period to enjoy these gains.

Once again, we are witnessing a repeat of this kind of peculiar selling and which has once again winnowed out many of the nervous gold holders. This time I suspect the selling has spread to the juniors and exploration companies. Many believers undoubtedly have sold over the past few days, and only after the shares have risen sharply and there is an abundance of public confident predictions of the future of gold, will they go back into the water. Please notice that over the past 10 days GG has once again had very large gaps down. This is sign of another panic selling just like the previous ones were which ended up being major bottoms.

Listen, I wish I had sold more heavily before some of the wicked tops came, but most of the time, I have missed them. But what I am trying to show you that this behavior is part of the character of this market. It is also why people like Bill, Jim Sinclair, James Turk and others who have predicted the 400% jump in gold--FOR THE RIGHT REASONS, have urged their readers not to try to trade in and out as many of the top callers have called for. Bull markets, especially in the early stages, are emotional because they will not cooperate as you might think they will or should. As Richard Russell has continually remarked and which most seasoned investors know by now, markets will do everything they can to keep you from succeeding.

Study these three charts of Goldcorp and observe how a stock that has done remarkably well has actually behaved. I believe that we are once again at one of those points where the investor, who remains patient and understands the landscape of the gold market with all of its manipulation and leverage, will succeed.

Chuck
ikiecohen@msn.com