Gold to 500?

Posted on September 29, 2005 , filed under Stocks | Print This Post

I hear people who wouldn’t normally discuss investments or stocks chatting about gold. To me, that’s the first sign that something is wrong. What do I think about gold? I think it will keep rising. Do I think gold will break 500? Absolutely, I use a great website called kitco.com to track the daily price in gold. To paraphrase an article I read, I believe the question of gold hitting 500 is not if, but when it will break 500. There’s no question that gold is amidst a bull run at the moment and the metal is at an 18 year high.

Every bull run typically goes through 3 phases. The first is when value investors come into the mix and start to define the investment opportunity. The second phase happens when technical and institutional investors come into play. The third phase happens when the regular investor takes notice of the institutional activity and tries to capitalize on the momentum. During the third phase, fundamentals and logic gets thrown out the door and is replaced by speculation and greed. All analysts are in complete consensus that whatever it is will continue to go up. You hear normally investment adverse people talking about the opportunity. These are all signs that something is wrong. It means that greed has come into play.

I believe that gold is in its third phase of a bull run and that it will top 500 sometime in 2006. When this happens I would look at shorting stocks of gold companies. A few on my watch list are BGO, IAG and GG.

*Disclaimer: I bought BGO early this year at $2.25 and again when it hit $1.94. I sold BGO at $2.43 on August 3rd. I think that BGO is headed to $3.50. I would look at shorting BGO if that happens without any forward looking news or catalyst to cause the price to go up.

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Pingback by RawGreed.com - Stock Updates, RawGreed Awards, Business Gossip » Blog Archive » Gold nearing $500

2005-11-18 10:48:08

[...] Gold is on its well on its way to $500. Gold is currently trading at $484. I wrote an earlier article on September 24th, 2005 called Gold to $500? I discussed the effects of gold at $500 and what to watch out for once gold crosses the psychological benchmark. Here is a link to my complete gold watchlist with long term price targets and strategy. I continue to believe that the question of whether gold will break $500 is not if, but when. An important note to my strategy for gold is not to enact any short strategies until technical and institutional buying has slowed down and speculative buyers have come out in full force. I would wait until gold has taken a major jump over $500 for at least 6 months-1 year before shorting. If a bird flu pandemic materializes, I would advise to do the exact opposite and instead build a sizeable gold position. [...]

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