Gold - sent to subscribers - January 16th, 2002

A number of gold stocks have been moving lately, some hitting new yearly highs. There could be a number of reasons for this;

- gold is usually associated with inflation. It may be that traders are begining to hedge their bets now about a rise in world inflation, as economies around the world emerge from recession, increased war spending, fighting terrorist activities.

- Australian gold stocks could just simply have been undervalued, in light of Normandy takeover events.

- or for those conspiracy theorists out there, you could check out the
following link

One way to find out how certain sectors are faring, and where the strongest stocks in the year ahead may come from, is to make a quick review of the index charts.

Personally, I feel the first reason is consistent with about where we are in the 18 year property cycle. One could reasonably expect now a pick up in asset price inflation, and the market to react in advance, accordingly. (Interest rates are below the inflation rate in the US, so one can borrow with a negative real cost at present.) However I try to be on guard about always looking for things to confirm what my point of view of the cycles is. If the index, in this instance gold, is trending up, then it's trending up, and one does not need to look for a reason, to get on the trend.

some stocks;
gbg, Ihg, Iyc, sgw, gld, gym, hfy, rgs, her, kcn

We have had our 90 to 120 days up, which is so common after a major low, as I noted for you in November. News must now come out that will be interpreted to drive markets lower; usually to the mathematically calculated mid point of the run up, for the Dow in particular.

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