AS BOB CHAPMAN SEES ITThe question arises, why are quality gold shares not going up as gold moves higher? The simple answer, which we passed on to you last week is, hedge funds and other investors are buying gold bullion long and shorting gold shares as a hedge. Many funds and other professionals, as well as the average investor, sell calls against their long gold share positions. This is why gold shares are not presently performing the way we would like them to. Of course, when they do not perform, the junior shares and exploration shares do not perform either. Once hedge funds sell bullion, they will buy back in gold shares, so you could have gold bullion correcting and gold shares moving higher. As an excuse to avoid gold shares or to recommend against them, analysts say they have too high a price earnings ratio (P/E), when in fact as the price of gold moves higher the leverage of shares is enormous. Their costs rise only marginally as their earnings catapult and gold rises. There soon will come a time when stocks, bonds and real estate will be headed down and the only leveraged game in town will be gold shares. If gold is going to continue in a bull market, then shares have to participate just as numismatic coins will participate. Hedgers and option sellers have made gold shares cheap, which means that you should be buying and hold them. This is a guaranteed win. Remember, the trend is your friend.