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--- Begin Message ----Caveat Lector- Gold: A Modern Piggly Wiggly Event?By Jim Sinclair http://www.jsmineset.com/s/Home.asp February 12, 2003 The recent selloff from the $390.80 high in gold has not and, in my opinion, will not alter the structure of this long-term bull market in gold. Gold has always been and will continue to be a market with supply/demand skirmishes between titanic forces with huge interests in the resulting price. The almost straight-up action of gold from $371.50 to $390.80, followed by a similar reaction down, has all the signs of a forced, expensive short cover. Generally, the entity that acts as broker/gold bank for the short cover can be counted on to sell the final ounces SHORT to the covering entity, followed by the gold bank's pounding of the market after the finish of the short cover. Generally, a short cover action is recognized in the market by pro traders who also seek to fill the final purchases. Everyone tries to pile on the top prices of a short cover to become short themselves, as it always falls hard just then. You might like to read about the life of the great trader Jesse Livermore. After he cornered Piggly Wiggly Stores (the Wal- Mart of its time) on the NYSE and drove the price sky-high, he had a falling out with the chairman of PWS, who had retained him to effect the long corner. Livermore quit the operation and sold his final Piggly Wiggly shares SHORT to the strangled short sellers, who were forced to buy. Piggly Wiggly did exactly what gold did today -- exactly. If it walks like a chicken, smells like a chicken, clucks like a chicken, has feathers and lays eggs, it IS a chicken. This smells like, looks like, and acts like a short cover. Therefore, we well may have seen the first painful and bloody short cover of a gold-producer hedger. Now, did this have anything to do with the rather caustic announcement today that Randall Oliphant of Barrick Gold was fired? That is certainly a rough way to announce a parting of the ways for someone who, in truth, did make the company $2 billion on its hedge account during the bear market in gold. To announce that someone was fired certainly is not a compliment. I expect that this reaction in the gold price has either ended today at the $351.50 low or, at worst, will end at the next Fibonacci support line of $340 to $343. (Please see the gold chart on our Internet site.) The difference between Piggly Wiggly Stores and gold is that gold is fundamentally and technically in a long-term bull market. So another hedger, Newmont, might be shaking in their boots tonight. The U.S. dollar cannot launch anything but a technical rally from here. There is a $3 trillion budget deficit coming up between the deficit spending plans already in place, the tax cut, and the potential of war with Iraq. In my opinion there is no way the dollar is headed long-term anywhere but down. Add to this today's news that North Korea has missiles that could land a nuclear device in the United States. Personally, I want gold. Period. As Harry Schultz recently informed his private clients: "We have two choices when a significant reaction in the price of gold occurs. We can be bothered by it or, like the Asian/Islamic interests, welcome the bargain." I see this as an opportunity. I took advantage of it today in bullion. I will do it again if the cartel of common interest continues to push its luck. There are two lessons for today's activity in gold: 1. Those of us who trade must lessen our activity. We have to be willing to step into the abyss when gold is being hammered, guided by Fibonacci mathematical concepts. We also must be willing to supply markets that appreciate at the angle of ascent we recently witnessed. I am referring to the most extreme power-up trend. You can view this on the chart I have posted at www.JSMineset.com 2. Volatility this early in a long-term gold bull market means that we haven't seen even the smallest part of the extreme activity we are in for. It is an indication that the price of gold is more than likely going to $590 as an early indication of objective. The implications of that are most unwelcome in terms of what it means to other markets. A few conversations with the pros: KA noted today: "Surprisingly, silver lost none of its long-term internal strength on this decline, even though it failed to get through the $4.98-5.12 key overhead resistance." That speaks well of silver's future. MM said: "The pure gold shares opened lower, rose, and then held around their modestly lower opening. This is the first time that the gold community in those shares was not stampeded. That is a good sign for them for the future." -END- Your use of Yahoo! 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