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Prepare to Ride The Golden Bull
by Clive Maund

This article will assist its readers in capitalising on one of the big investment opportunities of this decade, namely the emerging great bull markets in gold and silver. These bull markets are expected to unfold over a five to seven year time frame and take gold eventually to much higher levels, and silver should put in an greater performance, in percentage terms.

Since the greatest opportunities will be presented by the gold and silver mining stocks, which are highly geared to the price of the metals, this site will focus principally on the mining stocks. However, as the chief determinants of the price of mining stocks as a class are the prices of the underlying metals, gold and silver will themselves be subjected to detailed analysis.

Gold's entry into a long term bull market, after a gruelling twenty year bear market, was confirmed by last December's breakout. The bull market is expected to proceed rather hesitantly at first, with significant advances followed by sizeable reactions, such as we have recently seen, as it embarks on a parabolic trajectory that will become ever more steep, until eventually, several years hence, it will culminate in a vertical meltup and very high prices, with the public clamouring for metals stocks.

Silver, meanwhile, is yet to commence its bull market, it is currently trading at rock-bottom prices as it forms a base area, with accumulation in silver stocks indicating that the great silver bull market should get underway before too much longer. So the great bull market in gold is still in its early stages and in silver it hasn’t even begun. The out-of-control credit and money supply expansion in the US, which has been worsening for years and is now approaching the terminal phase, is brewing a crisis of huge proportions. The dollar is likely to plunge, foreign investors, who have already taken a beating, will hit the exits, inflation will rise sharply as the cost of imports rises, interest rates will have to rise and the bond and stock markets will cave in. Real estate, which is one of the only things keeping the economy limping along, will go into severe decline. Millions of homeowners in the US will face a negative equity situation. After a period of inflation, rapidly declining demand will result in a deflationary spiral. In fact, we are now in a situation where inflationary and deflationary forces are at work at the same time; longer term, the deflationary forces should prevail.

Vast amounts of capital will be on the move, scurrying for safety, and there will be very few places of refuge. It doesn’t take a great effort of the imagination to envisage what will happen to the price of real money – gold, and silver, in this situation. With bank vaults plundered, steady Chinese, Asian and Middle Eastern buying, and gold companies covering their hedge positions, a tightening supply situation will become suddenly become an acute shortage. Ditto silver where inventories have been wiped out. The cabal or cartel, if it exists, will simply be swept aside, and shorts annihilated. Gold and silver will rocket. The total capitalisation of all the gold stocks in the world does not equal that of the Microsoft Corporation. Clearly, if only a tiny percentage of the vast amount of capital running for cover attempts to get into gold and silver stocks, the buying pressure will be enormous and the performance of these stocks will be spectacular.

I am pleased to be able to say that gold stocks, especially quality exploration stocks, are, generally speaking, very cheap relative to their prospects over the next several years. These stocks will, I believe, provide handsome returns to those who are savvy enough to buy them at these bargain prices. So far in this bull market there are only two minority groups invested in gold and silver stocks. One is the super smart money, which piled in, especially into the larger stocks, causing high volume advances in the early stages. The other group are the goldbugs, partly because they are always there. The big brokerage houses, by and large, are not in, and nor are investment and pension funds and the retail investor certainly isn’t. In other words this sector hasn’t been discovered yet, but when it is the gains will be stellar, because of the acute supply shortage.

There are countless gold and silver stocks with firm chart patterns and very good fundamentals, which are selling at good prices and just waiting to be snapped up. As the mainstream financial crisis intensifies, and gold and silver take off, the fundamentals and charts of these stocks are going to look a whole lot better still. There is, I believe, not a great deal of time left to accumulate these stocks.

I have started this website in order to assist readers in selecting the best gold and silver stocks, not merely to protect capital, although this is clearly vitally important, but also to position themselves for what will be one of the great opportunities of this decade.

A cordial welcome is extended to any Chinese readers. June is a landmark month for Chinese investors, who from this month are permitted to invest in gold, either by buying ingots or by opening gold accounts at their banks. China is a country of 1.4 billion people and has one of the highest savings rates in the world, so the entry of Chinese investors into the gold scene can be expected to have a significant impact.

As oer original article on clivemaund.com
 

 
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