Gold is definitely looking exciting on the charts! 

But already as we watch gold rise closer & closer to breaking its 20 year highs we hear “Oversold!”, “Oversold!” being shouted by pundits.  Is gold over sold right now & due to come back down a bit?  A good question to ask & my answer to this is – “So what?”

“…the outlook for gold remains positive despite recent dips in the gold price. The prevailing opinions were supported by a recent study, released August 9 by commodities consultant CPM Group. In its Gold Survey 2005, CPM said the market is still benefiting from the most sustained investor buying in at least 60 years…”  The Gold Report, www.theaureport.com, 8-11-2005

Let me put in a plug here for  “The Gold Report “ as  this is an excellent source for gold market related news & is published by the respected & successful Streetwise, Inc.  Anyway, the point to be drawn by gold’s present price action is that a new trend & a new long term trading range is slowly & methodically being established. 

The temporary swings & oscillations are less important & are really irrelevant to the simple fact that ultimately gold is heading much, much higher.  Just as the hand on a Grandfather clock swings back & forth price oscillations are to be expected, but it is the formation of the longer term higher trading range that is the important fact to understand.

”Dr. Clive Roffey, editor of Gold Action, recently told readers that he was classifying the recent correction in gold shares as “a minor breather in a continuing bull market and am looking for the gold stocks to move to new highs. The resource stocks keep on moving and I expect to see continued new highs across the whole of the resource area,” said Roffey.” The Gold Report, www.theaureport.com, 8-11-2005

Probably more money is lost by those who try & to establish an exact top & an exact bottom to a market.  What is that old saying about those who don’t see the forest for the trees?  I think wisdom necessitates us looking today at the overall forest and not the individual trees.  And I see an entire vast forest growing on the horizon as gold climbs in the long run to new highs that will in due course bring a ton of new campers into the woods.

My wife took our son to the chiropractor for the first time for an adjustment.  I asked him later how it went.  He said it was all right except for the “Cracking.”

And what about the price of oil?  Any one of you out there care to make a prediction as to how high the oil price will ultimately climb to?  Yes, as the oil price climbs we are just reminded further that the resources of the earth are being used up.  The following below is from the Drudge Report & we are just reminded further that maybe we better start looking at those fuel efficient Toyotas.

OIL HITS $67

And what about inflation?  Soon we are going to see greater evidence that inflation is not just a myth, but is an established & growing fact.

NOW: INFLATION

And gold’s place in the sun?  We will eventually be looking at new record breaking prices for gold as the year moves forward.  Gold Letter provides subscribers a review of gold, silver & other contrarian opportunities.  Our goal is to provide a brief review of those companies considered to represent respectable & excellent speculations.

David N. Vaughn