2006: DAYS OF
SILVER AND GOLD
Henry Weingarten Last Updated:
recommend first reading our previous gold posts:
Cosmic Favor and Silver Bells
and Christmas Gold if you have not already.
periodically review our premium S:
NEW 2006 FIRST
Market Professionals please note February 1, 2006 we are holding our
at the Princeton Club in NYC to
celebrate the new Ben's Fed reign and Gold's $500 price win. I
recommend reviewing ALL the presenting triple gold commodity companies
for possible purchase.
$552 SILVER 10.50
2006 GOLD TRADING TARGET #2 IS $580 & Silver $10.50
Note: As we reached
our $545 target in December (Feb gold 544.50), we raised our 2006 P1
target from $545 to $552.
2006 portfolios, we recommend from 10-15% gold and 2-5% silver.
From January 9th WSNW: "I am giddily anticipating the increasing
probability of reaching our $552 gold and $10.50 silver targets close to our
February 1, 2006 Triple Gold Conference.
If you imagine $400 gold to be like $40 oil, and the $500 gold price level
acting much like oil when reaching $50, then our first or P1 2006 gold target
of $550-552 might act like $55 oil. At one point in time not very long
ago, it seemed almost unimaginable [to non-believers, of course, not for gold
bugs]. Then some time after $55 oil first manifested on the physical plane, it
became the trading floor and the not the ceiling. So too for $552 gold
sometime in 2006?"
reaching our P1 target of $552 in January, we issued our second trading
target of $580. Additional material released to our platinum and
institutional subscribers to be posted here AFTER our February 1, 2006
Triple Gold conference.
If $400 gold indicates the presence of inflation, how can there be $500
and virtually none? Must
it be $550, $600
or $800 before the talking TV heads acknowledge what every living and
American knows: THE DAYS
OF CHEAP FOOD AND ENERGY ARE LONG GONE!
[12/21] We have started our second trading gold
buy (physical) and first (gold/silver stocks). Our ideal second gold/silver stock
number is 115-116. Xau 118 could hold, but I would prefer lower obviously. Remember Markets can do ANYTHING end of the year, so
have cash and be ready to buy on weakness- i.e. before LONG before
January 1, 2006 for a wonderful golden January.
We will be doing (have done) the first of three gold buys today to hold
into the new year. This will be in physical gold (gold) or futures.$500
cash was tested last night, it may not be the end of the correction but
it should be the beginning of the H2 December 2005 accumulation! I
would like to see the XAU below 116. If so, we may do a token
accumulate in gold shares today and then buy tomorrow DEPENDING ON PRICE.
Now that gold has retreated to below $525 (currently 510), it is once
again UNDERVALUED. Hence, we will resume trading the long side. Depending on how, when and if markets tests $500 or even $485 SOMETIME
BETWEEN NOW AND THE END OF THE YEAR, WE WILL BE BIG
BUYERS OF GOLD AND SILVER FOR A STRONG JANUARY UP MOVE!
$800 is coming well ahead of both 2009 and Godot's imminent arrival!
gold markets made it very clear that we
are in phase two of the gold bull market that began earlier this
we enter phase 3 with $600 or $800 gold?
At this point in time, I am uncertain as we analyze the
of the key “new players”: Hedge funds diversifying
from black gold into yellow
gold, Asian and Middle Eastern buyers, and buying from second and third
tier [and stealth
first tier?] central bankers. While
phase one was very easy for me to trade and forecast, [few hedge
fund games, prominent astrology and a greatly undervalued commodity],
will not be as easy. However,
always phase 3 to look forward to when
the NASDAQ Internuts became gold bugs and mine
lovers. Truly it will then be believed that ONLY GOLD IS AS
GOOD AS GOLD.
GOLD FORECAST: PART I
As Gold reached an 18-year high last week, we recommended taking
profits. In fact with gold above $487, we suggested trading the short
intraday more than the long side, but NEVER overnight.
Please remember, I
don’t advise selling any
investing and hedging gold positions, which we plan to
hold at least until
FORECAST: GOLD WILL BE $500 BEFORE THE NEW
The only question is whether it will be the
American (12/31), Chinese (1/29) or Islamic (1/31) New Year!
GOLD IS AS GOOD AS GOLD
"Gold is loved so
much by everybody at the moment, it is hard to say anything bad about
THE MAJOR NEW REASONS TO
OWN PRECIOUS METALS IN 2006 ARE:
David Holmes, vice-president commodities, RBC Capital
appreciation: First stop 7.85+
- Declining US
Dollar due to increasing US Political and Economy Weakness
- The probable
approval of a Silver ETF
Our BIG play for 2005 has been gold.
We believe it
will continue to reward investors and out perform in 2006.
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. Unlike 2005, Gold
is no longer
out of favor. In
2006 and even more so in 2008, gold and silver will become a
"speculation of choice" of not only momentum traders, but for both
greedy and the fearful investors. How how is up? Gold natural
resistance will the 87
crash aftermath resistance of $497 and
rounding. Then the
early February 1983 peak of $509. Thereafter, there is $525, $550, $600
and $610 Resistance target. To complete the rally, at
far higher numbers would be its third natural
resistance zone circa its 30+ year high of $800.
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 ABOVE 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!
In Q1 2006, you
should buy and hold gold as if 2008 were coming!!
The three major positives intermediate term are:
1) Saturn having left Cancer.
2) Increasingly strong Jewelry Demand
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! Until 2005, I have had
little interest in Silver, but my views have changed.
Bottom line: It is as true for Silver as it is for Gold. There is
little fundamental justification for its current low price.
I would suggest 25% of your precious metal portfolio be
allocated to silver and silver stocks. Silver Instruments
should be more traded and when it out performs by 16% of more, Sell or
Stop it. Conversely, when it under performs by 16% or more, begin (re)
Additionally, Silver, like diamonds, tends to outperform during the "good times" and
under perform during the "bad times." Hence, we are more likely to
trade Gold when the stock market is bearish and Silver when it is
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.
mining costs are helping to drive up the price of gold. G old
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.
Global agenda: Japanese gold rush:
Now that we can see the Japanese joining the Chinese, Indians and Middle, who
is next? Why the Americans. And just when will the Yanks be coming? In 2006 of course!.
Bottom line in 2006:
investor will want more exposure to the gold market, just as they
had to the energy market in 2004/2005.
a 12%-20% long commodity/hedge allocation into 2006 depending on one's
portfolio risk/reward parameters.
Our 2006 Fair Value for gold is $545.
Last year Gold was projected to traded within a $450 to $552 price
band. Next, we foresee a trading range of $475 to $625. Barring a
major catastrophe, there will be significant intermediate and long term
selling between the $600 and $625 price zone. In 2006,
$510 is the primary pivot and $552 first key resistance [P1 530 P2 545
P3 550] and $500 now key support. The first 2006 XAU target is
140 with key pivot/support at 115.
Having been reached, XAU now has 155 as resistance and gold is a trading range of 540 to 580.
Gold and Silver will become more mainstream investments and
speculations of choice in 2006.
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) and Barrick Gold (ABX), 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 $550. Hence is still more
short term upside in the metal itself. However, once gold moves to
$525, 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), Agnico-Eagle (AEM), and most favorite single gold stock Nova
(NG). Likewise four Silver Stocks Pan American Silver (PAAS),
Silver Standard (SSRI), Silver Wheaton (SLW) and Western Silver (WTX)
are likely to similarly benefit. 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
$500 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 to new
multi-year highs, small cap gold stocks (as a group) are likely to
perform much better than either the big cap XAU or HUI stocks or the
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 10 small cap companies, all together
more than 5%-10% of an overall aggressive portfolio allocation.
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
One major reason is that
Senior and Intermediate gold stocks previously have already built in a
$552, according to BMO Nesbitt Burns gold analyst Geoff Stanley. This
fits perfectly with our rough upcoming intermediate term gold
of $450 to $550.
· Gold is currently at 25 year
highs. We project it higher longer term into 2008.
· As a portfolio hedge, we
recommend from 12%-20% gold and silver for many of our model
portfolios. This would be done conservatively with a mixture of
gold (GLD)* and gold majors ABX and NEM. If you have more tolerance for
risk, look to midcaps such NG, AEM and MDG. For even more speculative
risk/reward, consider the larger silver companies like SLW and
SSRI. Another choice is
Central Fund of Canada (CEF) which
is a good conservative way to play gold
with the positive addition of some silver exposure, especially until
EFT (Exchange Traded Fund) is trading. Also consider the XGD iGold
Exchange (ETF) which gives you the beneficial ownership of the 17
component gold stocks in the S&P/TSX Capped Gold Index. Also we
look forward to the future listing of the GDM Amex Gold Miners Index
(currently 36 gold and silver companies).
· We recommended that gold and
on weakness and temporary US$ strength.
· If you love to gamble and
desire Las Vegas
style investing excitement, buy a group of 10 microcap stocks
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 a scramble for assets now. The real test will be if it goes through
$520-$525, in which case it probably runs up to $650. We’re
in a bull
market for commodities, about one quarter the way through a 20-year
Frank Holmes, chairman, US Global Investors
HW: While I agree with your price target potential, I
would think it would pause well
before given strong overhead resistance at $550, $600 and $610.
momentum players now see that buying (gold)
on dips seems to be the best possible trading strategy. So you have
moving averages, higher volume and higher open interest. You have all
elements for momentum players to move into the market."
George Gero, vice president with
RBC Capital Markets Global Futures
"There doesn't seem to be an end to the reasons why people
want to keep moving into the gold."
George Gero, vice president, RBC Capital Markets Global Futures
HW: I agree 100% with you about Middle East tensions and strong
crude oil prices. Clearly a number of traders who closed long positions prior
to the end of 2005 are now looking to re-establish them.
"Gold is more and more becoming an insurance policy against
any type of disruptive risk and most portfolio managers believe that gold is an
asset which should not be missed in their portfolios.”
Frederic Panizzutti, senior
WSNW subscribers are invited to review our periodically updated premium
story behind the bullion bull
Newmont Says Gold to Rise Above $1,000 as Asian
If Spot GOLD closes
three days in a row above US $ 501 pto, the charts indicate,
that it will
zoom to US $ 550+ pto in a matter of 6/9 weeks. Bears are
trapped in Asia. I advise investors should not book profits at this
GOLD. We advise to book partial profits at US 600 pto which we can
HW: Yes it can happen as you say, but we will be booking/protecting
some profits ahead of $550.
READER: You say gold
will be around 545 in
February. With 545 you mean: February future or GLD? This is rather
Why don't you use the real gold price or GLD?
HW: As the difference between cash and Feb
futures is only $4-$5, there is really not much difference. I
primarily trade gold
futures and invest in
gold stocks and recommend short term hedging against the Philadelphia
Stock Exchange’s XAU and the AMEX’s Gold BUGS Index
(HUI) or the
future ETF based on the Amex Gold miners
Index (GDM). Some days I confess I do feel a little dyslectic. Take
the XAU in retreat from 126 to close below 123 as the longer term
in some 2005 profits, yet the futures were running up closing up more
frequently review our premium S: