By Peter Brimelow
CBSMarketWatch
Monday, June 20, 2005

NEW YORK -- Is gold getting going again? Its investment letter
backers are increasingly confident.

Some gold-minded readers objected when I noted recently that gold's
euro price rise, breaking through 350 euros, didn't seem to be
getting much attention. Hey, I thought I was making a contrary
opinion point. Gold finished the week strongly, closing Friday at
$437.30.

And somebody is noticing. The Hulbert Gold Newsletter Sentiment
Index (HGNSI), which represents the average exposure to the gold
market among a subset of short-term gold timing, stood at 42.86% on
Friday night.

This is far from alarmingly exuberant -- the HGNSI's range is from
89.6% to negative 31.3%.

But the HGNSI figure does represent a sharp swing from negative
30.4% in April, although bullion itself is less than $20 higher.
This makes Mark Hulbert, who is allowed to make contrary opinion
points, slightly nervous.

However, Hulbert concedes that the April low was itself an extreme,
which at the time he regarded as a bullish sign for gold, although a
bad sign for the financial system.

Four gold-timing letters have beaten a buy-and-hold in the gold
market on a risk-adjusted basis over the past five years, according
to the Hulbert Financial Digest. They are: Corcoran's Chronicle,
Mutualfundstrategist.com, No-Load Portfolios, and Professional
Timing Service.

All these letters are currently holding gold, although Professional
Timing Service is not fully invested.

Corcoran is an increasingly eccentric, elliptical letter with a wild
pattern of success and disaster. Most recently, editor Craig
Corcoran just says his gold model is positive. Then, as has been his
pattern recently, he appends what he calls a "cogent comment." This
time it's from Tim Wood of Resource Investor, who was interested in
the euro breakout, and concluded:

"Put very simply, gold has stopped, for now, being a mere
beneficiary of a weak dollar. It is no longer just another dollar of
yield antidote -- the metal is lately the currency unit of choice."

Professional Timing Service is equally enthusiastic about gold.
Editor Curt Hesler wrote recently:

"There has been an important change in gold's behaviors and that of
the mining shares. ... I believe it indicates that the late May low
will turn out to be very important. The reason for this new behavior
is the rejection of the ECU constitution by France and the
Netherlands. The euro is in crisis, and currency traders are not
moving into dollars with the enthusiasm one would expect. What do
they want? They want the good old days of marks, gilders, francs
etc. Without three alternatives, they are buying gold. ... My advice
is to hang on. These are long-term investment positions, not trading
positions. In the long run, you are going to be happy you have them.
What's next for gold? The next upside objective is $450, and then it
will be off to $500."

Interestingly, Hesler admits that his trading models have "not
kicked in yet." He says frankly that they are momentum models and
thus won't move until the trend is well established. These models
control his portfolios, which are what the Hulbert Financial Digest
monitors.

But that doesn't stop Hesler from speculating. He has recently
raised the specter of crude oil reaching $76 a barrel.

And on equities (where his record, according to Hulbert Financial
Digest data is less good -- possibly a relief) Hesler is
gloomy: "The stock market is heading for big trouble this summer. I
don't expect to see a crash, but you shouldn't look for anything
spectacular on the up side from here. ... by the end of August, I
expect the market will be back into full bear mode."