Gold's secular bull market.....Secular Bull Markets Defy Gravity Most of the Time
By Peter Grandich
February 28, 2006
www.grandich.com
I received numerous inquires asking if I changed my thoughts on the metals and mining shares market during and after yesterday's trading. Apparently a $5 down day after nearly a $10 up day and weakness across the board in mining shares for "one" whole day, made some wonder was my "all-clear signal fogging up. In addition, a newsletter writer appearance on ROB-TV, suggesting gold is historically weak from March through September caused some readers to go from "jubilation" last Friday to being a "bundle of nerves" yesterday.
First, let me briefly touch on the "seasonally" commentary. I'm acquainted with the newsletter writer who made the comment and believe he does good work. But like me and the rest of us so-called experts, he puts his pants on one leg at a time. It's a mistake to think any of us "walk on water". Those of us who attempt to make a living looking into the crystal ball only end up experts on how to eat a lot of broken glass. Like all commodities, there are seasonal patterns and gold is no different. Because jewelery demand is about 75% of all demand, it's an important fundamental factor many gold bugs under estimate in their "multiple-thousands" price targets. The newsletter writer accurately pointed out there's a historical lessening in demand from late winter through late summer. But where he and I obviously differ, is that this secular bull market is made up of many different factors, some of which (the past manipulation coming home to roost), are overpowering normal seasonal patterns.
Secular bull markets defy gravity most of the time. They eat up and spit out most market top forecasters. Most importantly, they usually end not in fireworks but roll over. We've nothing resembling that at the moment. We did have a short but sharp correction, something that has taken place along the way and should continue to do so as we go through $600 this year. However, the surprises for the foreseeable future should be on the upside, not the downside.
I'm also seeing sentiment readings returning to more normal levels after just about everybody jumped on the gold bandwagon at the beginning of the new year. Even some of the most ardent bulls are speaking of further corrections and the inability for gold to move up until a period of consolidation. Because mining shares continue to under-perform bullion prices overall, the retail investor is once again looking for a rise in bullion to lift all boats. It's here where I hear the most moaning.
Be Long and Strong in Gold!!!!!!!!!!