Goldbugs! Wherefore art thou, Goldbugs?Goldbugs, Goldbugs!
Wherefore art thou, Goldbugs?
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Ralph Kettell
June 8, 2004
I had planned on finishing this report last Friday after the gold show, but that was apparently not in the cards. I was concerned I might be scooped by another writer on this story, but apparently no one else saw what I did.
The big news from the gold show is that it was big, very big, much bigger than usual, nearly twice as big as last year's show. Instead of one floor of exhibitors and small conference sessions with miscellaneous events on another floor, this year there were a load of companies showing off their wares on two full floors. Many, many, many companies, in fact so many companies that I had never heard of many, many of them.
According to the conference directory, there were 239 companies represented at the show. Two hundred and thirty-nine! Wow! This sector is hot, maybe too hot. Oh no, that was perhaps true back in March (you know when the companies were registering to exhibit), but certainly not now. No, not after the correction, er crash of the past month or so! Enough frivolity, I will give some more details concerning the show.
I arrived at the show around 10:00 AM on Tuesday. I was worried about arriving at that time, because I had misplaced my registration packet and that meant standing in line. I remembered from the NY show last September that the lines, aka horde, were queued back to the elevator at a similar time in the morning. Imagine my pleasant surprise when I got off the elevator on the fifth floor of the Marriot Marquis and there were only three people in front of me at the registration booth.
I didn't think too much of the small crowd at the time and entered the 5th floor exhibit hall. As I walked through the exhibit hall, I thought the crowd looked a little light, but attributed it to the more spread out nature of the show with it being on two floors this year. The more I strolled around and talked to people the more I realized that not only was the show not crowded, but also it was chock full of industry folks and not very full of potential investors. Where were the investors, you know the genus "goldius bugius." The gold bugs were few and far between!
My best metric on how not crowded the New York Gold Show 2004 was or was not (depending on your point of view) relates to Novagold. Novagold is a fabulous junior exploration company with incredible resources and great prospects for adding more in the near future. As such, they are always an incredible draw for both current investors and those trying to decide if they want to become investors in the company. For numerous reasons, I and some of my associates usually need to talk with either the CEO or one of Novagold's VPs. We normally end up waiting for several minutes only to find that they have a meeting to get to and we set up a later time for an appointment. This past week, I had to wait only 3-4 minutes to talk to their VP and he and I conversed for a good 10 minutes or more. During that time, no other investors came up to chat, in fact no one even stopped to stare at their resource charts and maps while we were talking. No one stopped to pick up any literature in that time! Incredible! I have never seen anything like it! This was not some no name, Johnny come lately, junior exploration company. This is the premier junior gold company which will be a mid-tier producer in three years time. [NovaGold]
The more I walked around the exhibit floor and ventured up to the 6th floor to see who was upstairs, the more I was aware of the lack of investor presence. The talks which I check up on were not at all well attended either when compared to previous years or other recent conferences.
On Thursday, the attendance was worse still. Exhibitors could be seen wandering around talking with each other and checking out each other's projects and progress. Amazingly some companies would leave their booths unattended when they had meetings or went to lunch. I heard a rumor, that the conference organizers were recruiting folks to come to the free show for the food and door prizes. Please remember I said this was only a rumor. I do know that there were a lot of folks running around with "treasure hunt" cards to get all sixteen stamps so they could be entered into the drawing for the 100 silver coins and the diamond tennis bracelet. Many of these "investors" had little or no interest in getting information from the lucky (unlucky?) companies who had the stamps at their booths.
Now what conclusion does this lead to?. Is the gold bull dead and is this just confirmation of that fact? Not likely. As a dyed-in-the-wool contrarian, I will spell out precisely what it means. "Everyone" knows the gold bull is dead, just look at a chart of the HUI. There is little or no interest in the sector at this time. What does this mean? Simply it means that all the gold bugs have sold out and are waiting for the bear market in gold to run its course. They have been so conditioned by '87-'88, '91-92, and '96-97, that this is just another aborted bull run within a long term secular bear market in gold. As Richard Russell is fond of quoting in relation to stock brokers not making any money, because they don't believe their own BS, so too are gold bugs currently guilty of not believing their own BS at a time in history when they should be so convinced of the validity of their cause.
Folks, "THE BOTTOM IS IN!" The lack of interest at the show in NY just underscores the extremely low bullish consensus numbers toward gold and gold shares which have been registered the past few weeks. If I were an investment advisor, which I am not, I would be telling all my clients to buy gold shares with both fists. Of course I have been suggesting to all my friends and family to do so. In order to buy low and sell high, you have to buy low first, unless of course you have a penchant for selling short and now would not be the time to do so in gold shares.
June 7, 2004
Ralph W Kettell, II
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P.S. I would like to apologize to a couple of folks at the NY show who wanted to talk to me about one or more of my past articles/analyses. I was very busy with meetings and had to continually put them off. Please feel free to email me, and I will gladly give you a call to discuss your questions.
Disclosure:
The author is not an investment advisor and this article should not be construed as a recommendation to invest in the discussed securities. The author is merely presenting some possible scenarios and what the potential risks and rewards associated with an investment in these securities could be. The author has not been paid to write this article, either in cash or securities. The author does have a substantial position in this stock, but has not bought or sold in the past 30 days and as all of his stock is from a private placement and has a legend, none will be sold for the next 60 days or more.
Disclaimer:
The author's objective in writing this article is to make potential investors aware of the possible rewards of investing in this stock and/or warrants and to elicit interest on their part in this stock to the point where they are encouraged to conduct their own further diligent research. Neither the information, nor the opinions expressed should be construed as a solicitation to buy or sell this stock. Investors are recommended to obtain the advice of a qualified investment advisor before entering into any transactions in the stock.
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321gold Inc