BELLS AND CHRISTMAS
Henry Weingarten Last Updated:
recommend first reading our previous gold post: Summer Gold Find
Cosmic Favor, if you have not already.
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NOVEMBER 17 GOLD HIT OUR 487 TRADING TARGET!
Please note February 1, 2006 we are holding our first professional Triple Gold Conference in NYC to celebrate Ben's Fed reign and Gold's $500 price win.
August 30, 2005 Special WSNW Alert:
yesterday’s market action, corrected today (we recommended
doubling up on shorts yesterday MOC, Today’s action on gold
at 434 and Silver at 674 suggest a
reason to BUY as a trade or adding more investment that is likely to
correct back soon.
Markers: Dec Gold 435.50, Dec Silver 676.50,
XAU 93.44, HUI 198.79 and NG $6.90.
GOLD 468 9/16/2005! 479 9/21.2005!!
July 1 while gold was
crashing down, we issued our second major institutional trading Buy MOC
Summer trading targets re-iterated $467 to $500. Note:
July 16, Saturn enters Leo which
rules gold. We expect a slow change (remember Saturn acts slowly and
"late") regarding investors' view of the value of gold as an asset
reached our P1 SUMMER 2005 target 9/16.
More important, EVERYONE IN
THE KNOW KNOWS THAT GOLD WILL BE APPROACHING $500 Q4 2005 OR Q1 2006. Enough
GOLD IS AS GOOD AS GOLD
Our BIG play for 2005 has been and remains gold. We initially believed
it would break out
to $480 to $500 by
the end of the summer. It did reach 16 years highs as Oil went to all
and the Chinese re-evaluated the Yuan in July. Hence, we hold the same
target for Christmas gold in the buying we recommended on August
30. Traditionally, geopolitical uncertainty, war and
global economic sluggishness have been good for gold companies. Years
ago, we were one of the first to suggest that Gold was more than just
an inflation and safety metal (a status it lost after the first Gulf
war), but also a currency. Today, it is widely recognized
gold acts like a currency and that a weak US dollar is good for gold.
It is also widely recognized that a further decline in the US dollar is
inevitable. Gold remains very
out of favor.
For contrarian investors,
this also adds to the risk/reward profile of owning gold.
Finally, Christmas gold is
seasonably positive, promising the potential for a MAJOR breakout to
natural resistance will the 87 crash aftermath resistance of $497 and
rounding. Quite a few gold aficionados have remarked that were the
gold not being manipulated by the powers that be, its tracking of
might place it at far higher numbers- $600, $700 and even its second
resistance zone circa its 30+ year high of $800.
OIL CAN TRADE AT ALL-TIME HIGHS, WHY NOT GOLD?
peaked at a nationwide
average of $1.38 a gallon in 1981, according to the Energy Department.
That's about $2.95 in today's dollars.
Put another way, the Iranian revolution of 1979 and the country's war
against Iraq in the 1980s sent the cost of a barrel for U.S. refiners
to $35.24 in 1981. According to the Energy Department that about $75 in
today's dollars. So will gold just stop at $800? Based on the
Oil/gold ratio alone there is clearly good reason for gold bugs to hope
for $1000 plus. Looking at the range of commodities, gold is
clearly the most undervalued. Additionally
gold price floor seen at around $425/oz.
GOLD INVESTING 101:
Two reasons investors should own gold:
1) Gold has outperformed the S&P 500 for the past five years in
a row. We expect that to be the case as well as in 2006 and 2008.
2) With the national debt approaching the magic 8 trillion number, gold
has an upside potential that has not been seen since 1980, i.e., a once
in a life time opportunity.
Happily, the XAU has broken out well above its 93.5 resistance, which
gave a major technical buy and hold signal. Hopefully, it will be a more or
less straight line from August gold to Christmas gold. If not, be
prepared to BUY, BUY, BUY as if 2006 were coming!!
Until very recently, I have had little interest in Silver. Perhaps it
is because I am a Leo, the sign that traditionally rules
gold. Perhaps it because in the US, Silver has been largely
considered a second class citizen: “gold’s poor
cousin” or “poor man’s
gold.” Perhaps it is because until recently there
have been very few pure silver plays and they have been even less
profitable than gold companies. But my views have been slowly
changing. I don’t know if it because Saturn has
just left the Sign of Cancer (which rules Silver) or the after effects
of attending a number of silver company presentations (SLW, SSSI, WTZ,
SVM-TSX) and my resistance is just wearing down.
The Silver Market- Tips for the Prudent Investor
A classic precious metal like gold, silver was also used in coinage and
utensils. These days, it is used more for jewelry and in the industrial
sector, e.g. electronics and photography. Many of the same
arguments that are made for gold, can be made for silver. Demand is
healthy and increasing. Additionally, Silver is consumed more than
gold, which is mostly held for investment and jewelry. Also, unlike
Gold, Silver is not a “political” metal. Plus most
world government stockpiles are largely exhausted.
The three major positives intermediate term are:
1) Saturn having left Cancer.
2) The remaining barriers on gold and silver imports in India is being
removed for individuals and small jewelers and
3) Barclays Global Investors is planning on marketing the iShares
Silver Trust, the first ETF fund that tracks the price of silver.
Three negatives for Silver investing are:
1) Under current US tax law; long-term capital gains on silver are
taxed at the maximum rate of 28% because silver is considered a
2) Most Silver production is a by-product of other metal mining- hence
most supply is less demand price sensitive.
3) Silver Prices are notoriously volatile.
SILVER vs. GOLD
Silver is to Gold much like NASDAQ is to the SPX. It is
smaller capitalized market, so if you crave volatility,
Silver’s for you! Silver is more an Indian story
than a Chinese one (Gold). Currently the Gold-Silver ratio is about
60-1, well below its long term historic ratio of 16-1.The China
investment story is better known than the Indian one.
Bottom line: It may be as true for Silver as it is for Gold. There is
no real justification for its current low price.
I would suggest in a 1-16 ratio of gold
holdings, i.e. ~1% of your portfolio vs. 16% for gold.
Note: Warren Buffet’s purchase of 130 Million Silver ounces
in 1997 for Berkshire Hathaway was just a little less than 1% of the
portfolio of his holding company at the time. For more, visit
often mentioned reason to buy
is further dollar weakness.
Equally important is
that fact that
new participants are entering
market, e.g. the
recent launch of several exchange-traded gold funds. Longer
our forthcoming view of a 2006
half of the year,
is also likely to
fundamentally positive for
are extraordinary times, where geopolitical risk and outlook
continue to outweigh normal stock market considerations.
Gold demand continues to grow faster than its global mined supply. It
is strongly rising in emerging economies, especially India and China,
which are becoming two of the largest gold consuming nations as well as
continuing strong demand from the Middle East.
mining costs are
also helping to drive up the price of gold. Additionally,
producer hedging continues to be unwound at a strong pace.
The biggest risk intermediate
term is the potential of further
central bank selling.
believe this will continue to be restrained by current European
Central Banks agreements at least until mid 2006, as well as partially
some Asian Central Bank buying.
Bottom line in 2006:
investor will want some exposure to the gold market, just as they
had to the energy market in 2004/2005.
gold/commodity hedge allocation into 2006 depending on one's global
portfolio risk/reward parameters.
Our Current Fair Value for gold is $487
as a currency. As an inflation
metal, we calculate gold’s Fair Value to be well
Hence we plan to use any temporary US$ strength primarily due to 2005
tax code provisions in Q4 2004 to accumulate more gold and gold
Gold has been in a secular bull market since making its 22-year low
four years ago on April 2, just under $257.
Gold has broad support in the 420-425 area; it has overhead resistance
450-460. Once it breaks out to the upside, then $480 to $500 is the
next natural gold target. Thereafter, we expect it to trade
within a $450 to $550 price band.
Gold will be approaching $500 BEFORE Christmas or SHORTLY
THEREAFTER? Do you care? I
don’t! We expect Silver to also Christmas shine.
Looking further out to 2006, we are
forecasting that Gold will shine brightly; by 2008 we project
it could be somewhat of a home run. Enough said.
Saturn in Leo, which began on July 16, 2005, could well signify a
future shortage of gold.
TO MAKE MONEY IF OUR FORECASTS ARE
Historical cycles show that a strong gold rally ignites the major
producers first. Soaring microcap gold exploration plays then follow
this. Just as IBM and GE are the Dow bellwethers, Newmont (NEM) is the
key proxy for gold. Given gold’s small market capitalization,
be the first big money portfolio play. Along with the gold
(GLD), Barrick Gold (ABX) and Placer Dome (PDG), it is where much of
the BIG Wall Street
money will go. Currently the stock price of the bigger gold companies
have already factored in a gold price of $450. Hence there may be more
short term upside in the metal itself. However, once gold moves into
the $480-$500 range, the reverse will be true and the gold company
stocks will outperform. A lot of more aggressive hedge fund
will move into midcaps such as Meridian
(MDG) and Nova Gold
(NG). Should any
of this be allocated to small caps? The answer obviously
according to individual portfolio risk/reward parameters. If I am right
about gold, this time microcaps
will fly as the public will enter the market. However, as the
first quarter is often a seasonal high for many gold microcaps, we
recommend some caution here. I would wait until Gold is above
450 before a strong commitment to gold microcaps.
No sector demonstrates the advantages of illiquidity better than the
gold share market. In a rising gold market, small- and mid-cap gold
stocks tend to produce a much bigger bang than simply buying gold
itself. When gold breaks through $450 an ounce on route to new
multi-year highs, small cap gold stocks (as a group) are likely to
perform much better than either the big cap XAU stocks or the metal
itself. However, investing in junior resource companies can be
especially risky. To minimize some of this risk, don't overload your
portfolio with junior mining companies. I recommend buying over time a
diversified basket of 5 to 10 small cap companies, all together
more than 5%-10% of an overall aggressive portfolio.
Note: You may wish to choose a mixture
early state exploration companies (highest risk/reward) with a strong
exploration upside ["bonanza"] potential with near production/early
production (lower risk) ones. Again this depends on one’s
more and more investors are coming to realize that 2006 will be a
for gold, remember that markets do not move in a straight line. One major reason is that
Senior and Intermediate gold stocks today have already built in a gold
$552, according to BMO Nesbitt Burns gold analyst Geoff Stanley. This
fits perfectly with our rough upcoming intermediate term gold
of $450 to $550.
· Gold was last above $500 in
1987, and we project it to test $480-500 before the end of 2005. By
then, or certainly by H1 2006, small cap junior gold companies will
as the Majors and
Midcaps have already done.
· As a portfolio hedge, we
recommend up to 15%-20% gold for many of our model
portfolios. This would be done conservatively with a mixture of
gold (GLD)* and gold majors ABX and NEM. If you have more tolerance for
risk, look to midcaps such NG and MDG. Another choice is the Central Fund of Canada (CEF) which
is a good conservative way to play gold
with the positive addition of some silver exposure, especially until
EFT is trading.
· We recommended that gold and
on weakness and temporary US$ strength.
· If you love to gamble and
desire Las Vegas
style investing excitement, buy a group of 5-10 microcap stocks that
are likely to soar should the public becomes as excited about gold as
they have about energy. Please remember however, that In early stage
drilling programs, the management, sources of funding, share
structure and promotional ability matter as much as finding
a current list of small
that we are watching, please visit my seasonedspeculator.com
Our long term recommendation remains the same: just continue to
GOLD as time goes by. Gold is cheap insurance against both
AND a future declining US Dollar!
It is also likely to resume its traditional "safe haven"
as well by 2006.
QUOTES IN THE NEWS
“Is gold beginning to unlink from
the dollar based on the growing recognition of the coming lower gold
mine supply and rising costs, or is a pullback looming after Comex gold
positions hit a new peak?”
Steve Shepherd, gold analyst, JP Morgan
HW: Both, first the former, then the latter, then once again the former
in a BIG way.
is really looking good now and seems to
have a clear upside objective."
Mark Keenan, fund manager, MPC Commodity Fund.
HW: P2 480 P3 487. Gold
is already at 17 year highs.
That top should be taken out sometime before the ides of
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ON THE WEB
Russia Doubles Its Gold Reserves
Noting that Russia presently has 5% of its national reserve portfolio invested
in gold, Guegina said, “10% of gold in reserves would be appropriate”.
HW: I believe at least 10% allocation is an appropriate
2006 allocation for most investment portfolios as well.
Good for Gold?
“His appointment is the best one that we friends of gold could ask for,” says
James Turk, who noted that gold started climbing right after the Bernanke
HW: This is why we are having our first Triple Gold Conference
February 1, 2006.
Or, how to stop worrying and save yourself from
the president's profligate spending and stubborn insistence on no new
Sad, but true.
Murenbeeld's gold price forecast for the coming year
COMMODITIES CORNER: Silver's Just As Good As Gold
“his probability weighted average gold price forecast for
the next twelve months is $502 an ounce.”
HW: I would have guessed an average price somewhat closer
to $499 medium term would be more accurate, given our rough 450 to 550
HW: It is not really as good long term, but intermediate term it will
be a very
gold could hit $1,000 an ounce
HW: More of this type of talk will help gold get it to our 2005 price
target of $487.
Spending Fueling Gold
”The dollar hasn't even started to drop yet and gold is going
nuts! I think we're going to see the XAU and gold pause over the next
few weeks to digest its gains and then breakout again as the US dollar
tops out and starts a move towards its 80 resistance level into the end
The move then in gold stocks will be incredible. You have no idea how
good it can be. Gold stocks are going to end up trading like Internet
stocks did in 1999.”
Junior Resource Stocks Are Ready to Soar
Yes I agree but watch out for “microcap”. The key
here always to ask: is the company management more interested
in discovering gold and building mines or are they more in the business
of selling stock!
Bullish HUI Technicals
”While the easy bottom-picking may be behind us this time
around, it is not too late to buy in for potentially fantastic gains if
this up leg proceeds as expected…The bottom line is the HUI
technicals, despite its strong run since May, still remain very
bullish. The index is definitely not overbought yet in light of past
bull-to-date precedent and indeed it remains nearly oversold still by
some measures. Major bull-market up legs take some time to unfold and
our current specimen continues to look technically young.”
Do you still see gold going down to 425 as in your 10/19/05
No. The bottom of its range is now [11/4] higher: $445 to $450.
READER: Can you make any sense of the day to day moves in
market? It goes down on days it should go up. It
important trend lines below 430 and then bounces back. It has
support where it should and goes straight down $7-$8 intraday when
there should be some bargain buyers to hold it. Uptrends
even without dollar strength.
HW: See the Comex Horoscope for this month [September 1],
“unexpected” action. As you know, we
Christmas Gold and Silver buying on August 30th, at 434, 674 and XAU
93.44. We don’t expect to see those numbers again for a long
time. We could be wrong, but it is certainly the way and
READER: Under "Four Reasons Gold Stocks Are About To Rise"
are two references to the XAU breaking out. Also, further
the page Mr. Weingarten says that he has looked at the horoscope of
XAU. The XAU is dominated in market-capitalization terms by
mega-hedging companies. As the climate for gold is more
now, many of these companies are unwinding their hedged
positions. They are selling their gold at current market
rather than at lower hedged prices. This fact is what will
the XAU increase. May I respectfully suggest that a better
measure would be the HUI index, which is comprised exclusively of
unhedged gold stocks? Any breakout in the HUI would reflect
increase in the price of gold rather than an increase due to previously
hedged companies now selling the gold at higher market prices.
HW: First, I use the XAU because more institutional investors use it as
a benchmark. Second,, their p/e tends to be slightly more down to
Thirdly, I like them more precisely for the reason you mention- they
are continuing to unwind gold forward options and hence the XAU should
move up over time for that reason alone.
RE: “[7/1] Friday July 1 while gold was crashing down, we
our second major institutional trading Buy MOC = $429. Summer trading
targets re-iterated $467 to $500. 07/12/2005 06:24:46 Our BIG play for
2005 is that gold will break out to $480 to $500 by this summer.
You have a strong bullish prognostication for summer gold, warn against
stocks in 2006, and forecast gold to outperform the SP in2006. Where
does that leave you on PM stocks? Given the current strength of gold
and the forecasted 2006 out performance of gold, do you advocate
holding PM stocks through 06? Or selling after the strong Summer run up
and then rebuying either later in 05 before a Christmas bump or in
early 06/after the Christmas slump.
With interest I reviewed your site. I have a strong belief in
gold, perhaps too strong. I've read your work with interest
was not surprised to see that gold did not strike the $480 - $500 by
July, or now August. I believe gold will rise perhaps later
year and be well underway by August of 2006.
HW: We had to choose whether to say that it would break out above 16
in August or our target price of 480-500. It seemed easier for
the latter, even though it had many obstacles. It will
more likely come with Christmas gold. Still the trading and
investing goals while high, resulted in substantial profits to players.
I don’t think it is so much belief in gold, but disbelief in
other things perhaps.
HW: As long as the XAU is above 93.5 I would stay long. That
from an investing viewpoint. From a trading viewpoint, if unhedged, and
IF you can time it well, I suppose you could sell or rather stop loss
some profits. That would be very hard for me to do at this
Note: On August 30, we did another buy at 93.44 and 434 December gold
and Silver 674. This could be either an investment hold or a
READER: I'm going to play devil's advocate on this one. Saturn in
cancer hasn’t affected the housing market, why should it
HW: Good question. First of all, it did at the end [Saturn often comes
come late. In this case- it has begun "capping it", but largely has
been far outweighed in the US by Alan Greenspan's easy money policies.
But Saturn does effect more than US markets. For example, in Australia
and the UK it did help stop it.
As for Gold and Saturn in Leo, our view is based on MANY factors, not
just this single astrological one. I also have looked at the horoscopes
of GLD, XAU and COMEX as well as fundamental, technical, seasonal and
Of course the proof is in the pudding and time will tell if we will be
eating crow or caviar by the time Saturn leaves Leo in 2007!
READER:: “According to CNBC, the $36 price of
Oil reached in 1980 is the same as inflation adjusted price of $93 (or
factor of 2.5833x). The high price for Gold in 1980 was
$850. Using their formula, that would equate to an
inflation-adjusted price of $2195. Using the same formula on
a pro-rata basis, the current price of Oil at $65 equates to a Gold
price of $1534.”
HW: Is it any wonder that most gold bugs consider gold under $500 a
screaming bargain? By 2008, it will be a similar memory to $30 oil
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