▬ $10,000 GOLD ▬

A MYTH OR A DISTINCT POSSIBILITY?

KIND OF FUNNY TO ASK THIS QUESTION AT THIS TIME

Life can be confusing, can't it? When you are following the gold markets, it can happen to you frequently. Already for quite some time, I have been contemplating sharing my thoughts with you on the long term view some commentators have on the price of gold and my ideas about it. But I have been holding back doing so because gold seems to have difficult times in taking the next step forward or rather, upward. And what sense does it make to talk about price levels of $5,000, $8,000, $10,000 and even above that when gold cannot even get past the $1,800 level and stay there? Even more so, it first has to cross the $1,600 and $1,700 first again. And this at a time that the overall circumstances in the financial world are far worse than we ever thought they would be, with a worldwide currency crisis shaping up despite an utterly sensitive agreement to save the Euro and some European countries from bankruptcy.

About a month ago, gold was about to break through the $1,800 and I found it rather likely that it would after some weeks of hesitation. Gold reacted pretty unfriendly and went almost straight down to $1,700, even broke it to the downside to find a bottom at $1,560+. Does that mean that those gold followers that have been basically negative all the time and predicted gold to go below $1,500 were right? Yes, at least partly, I have to admit. Does that mean that I and with me several of the most prominent gold watchers with me, have been wrong? No, I don't think so! Of course, when you have just made a strong case for gold going up way above the $2,000 level, life can be confusing. But I am not feeling guilty or bad at all because I am pretty confident that the future will prove me right. A good time to look ahead and see what the long term predictions are based on. I will elaborate on this subject in the December issue of G O L D V I E W.

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GOLD IS PREPARING TO TAKE THE $ 1,800 BARRIER AGAIN
I BELIEVE THE LONG TERM TREND IS STILL UP

Gold has already tried to break the $ 1,800 barrier to the upside a few times. And once, it succeeded. But there are too many people in the current gold markets that seem to get wet feet whenever the long term trend is being resumed. In itself that is not so surprising to me. Because we have seen the same since gold started its long term bull market in 2002. At virtually all breaks of $ 400, $ 500, $ 600 up to $1,900, there have been commentators, brokers, investors, portfolio managers, journalists that turned out to be disbelievers in what in my opinion was so clearly happening. The worst were the international bankers who just sticked to their religion in saying that gold has no function and future in the world of finance.
And thus, most of them missed the flourishing gold markets and the opportunities that it has offered to accomplish nice and far above average investment results. Often, I am thinking about all those investment portfolios of investment companies, pension funds and the banks themselves that are currently complaining that they can't make ends meet anymore and have to be bailed out by governments and international agencies. Also the Central Banks come into mind. They have been consistently selling big portions of their substantial gold holdings at way too low prices and wrong times. There are some studies available about those selling policies and they really make you shake your head with amazement. But not surprisingly, the high-placed banking officials that have been responsible for those miserable selling policies, have not blinked an eye, let alone that they made an effort to explain their stupid decisions to the public. Ignorance is bliss, isn't it?
Mentioning the public, they deserve our compliments. They have recognized the early movements and price increases of the precious metals. Many of them saw the early opportunities and the more the gold price increased, the more did they become aware of the promise it was holding. The smart and daring ones started to accumulate physical gold early, so there was early interest in the mining and exploration shares. But as the higher price levels of gold were confirming the long term trend, more and more gold buyers came to the market. The public really started to buy gold, it was a pleasure to see.
So, now that gold seems to struggle to break through the $ 1,800 again, what can we expect? A year-end rally that will take us up through the $ 2,000 level? I would not be surprised if we see that happen. But I am also realistic. If it does not happen, it will happen in the new year! The long term trend is still intact, I have no doubts about that. In my view, gold is still historically cheap. We still have a way to go, and I am confident it will be a long way. So don't get discouraged and enjoy the continuation of gold to higher levels. And look at the attraction of mining shares. The producing companies are having a party with the high gold prices and are reporting record profits. And the companies that are proceeding their exploration projects towards the production stage are highly promising. Time for study, research, homework and smart investing. It will be worth it!
Henk J. Krasenberg

Sometimes I can't believe my eyes and ears when I read articles or hear comments from people that have been in the gold and mining business for so long. While gold is enjoying a market that we all have been for, it is amazing to find that several commentators can't accept this reality and deem it necessary to spoil the fun by coming with doom scenarios. It is like that they want to be the first to go on record as that they have been predicting the downward turn of the gold markets, after they missed predicting the current upward turn some months ago.


Now, understand me correctly, I am not saying that gold will not be going down. It will, sooner or later, it would only be normal, healthy and better. I write these words when gold had the highest closing ever at $1,150.90. At $1,100, I said "let it stay here for a while and build momentum for the next upward move". But gold is determining its own path and speed. And I don't even find it surprising. There is so much going on at the side of the demand for physical gold, that is not going to stop suddenly.


But I can't help remembering what my old boss said when the price of gold was no longer pegged to the fixed $35 price; he said "Gold will never be worth more than $35 and if it will, it will always come back to that price." I was very young at that time and just in my very early working and learning years but already having my own ideas and opinions. Not surprisingly, the good old man was shaking his head when he heard my reaction. We are in those same times these days!


In these times of change, it is me who is shaking my head, not because someone is bringing a change of thought that I can't cope with (like my old boss) but because I see respected commentators not able to make the translation into the times of new thinking, they hold on to old dogmas as if nothing happened lately.


I usually don't like to point the finger to other gold writers just because I don't agree with them. But this time, I have to talk about an interview that Kitco-analyst Jon Nadler recently had with Lara Crigger of HARDASSETSINVESTOR. Under the heading "Gold Not In Bull Market", he warned investors "don't be fooled, the current bull market in gold is all an illusion – one that the fundamentals can't support for long". He may have 30 years experience but in my view, that only would have a meaning if it would contribute to wisdom. To me, it is not important how long you thought about gold but what you are thinking about gold today. Whereas he said "Most of the hyper-bullish analysts are trying to apply 19th- and 20th-century thinking to modern-day central bank policy……". But when you read his arguments, it is clear that they all come from the past. Who said that we have to measure the current bull market for gold with yardsticks and definitions from the past? You can be a realist and base yourself on the fundamentals of supply and demand. However, those figures from the past should only serve as a guideline for what is going to happen in the future. Vision is not meant to look back, it is meant to look forward.

For those of you who read my Editorial Comments regularly, it should be obvious that I don't agree with Jon and other commentators who think along the same lines. They seem to forget that something happened in the world last year and also this year. Who ever thought that the banking system could only survive with the help of huge financial supports of governments? Did those banks learn from it? No way, the arrogance of the fat cats that they used to be is still there, only the source of their money changed, the first bonuses have been paid again already. Did investors learn from it? Don't think so, they keep putting most of their money in the regular stock markets, blinded by predictions of economic recovery and rising share prices.

It is good to see that there are other investors who don't follow the crowd and go their own way. They are the ones that have either believed in gold already or started to get familiar with the precious yellow metal. They will see that there is a lot of confusion about the current development of the gold price, even among the most professional financial and investment experts. It is important that they make the right choices, not only where they put their money, but also and mainly to whom they listen. That can make the difference of day and night.

I choose to associate with those who dare to have their own specific views and base their opinions on what they see coming. Of course, they may and will be wrong sometimes too, but they have proven to be right this time. I have included their articles in the past issues so that you could have had the direction and guidance to benefit from the current markets. Read what David and Eric Coffin, Roger Wiegand, Julian D.W. Phillips, Scott Wright, Jeffrey Nichols and Sean Brodrick wrote. Analysts that have a sound and fresh mind and are not afraid to stick their necks out. They may be called "hyper-bullish analysts" by Jon Nadler, but I would prefer calling them the realists of the new times, the new thinking. I feel comfortable with them because I understand them. I cannot understand Jon Nadler and his doom colleagues, they miss one thing: GOLD IS NOT THE BUBBLE, THE GOVERNMENTS ARE THE REAL BUBBLE.


Henk J. Krasenberg

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