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| Send Page To a Friend | Friday September 5, 2008 |
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Gold stocks represent a tremendous buying opportunity this summer, investors were told at the 2004 World Gold, PGM & Diamond Conference at the Vancouver Convention & Exhibition Centre in mid June. Among the various well-known natural resource newsletter writers who all professed to be very bullish on gold bullion and junior mining equities were Pamela and Maryann Aden. Renowned for their prescient predictions on the direction of stock and commodities markets, the sisters publish The Aden Forecast ( www.adenforecast ) newsletter, which has developed a strong following since the 1980s. And their popularity was demonstrated by the packed audience that was on hand to hear the reasons why they are so bullish. The key catalysts for higher gold prices and a more vibrant junior resource sector during the next several years include a weaker US dollar, the onset of rising interest rates, the resurgence of inflation and growing global demand for metals, they declared. Perhaps the biggest driver for higher gold prices of all of these scenarios is the falling US dollar. And a US $7 trillion federal government debt load, matched with the burgeoning twin deficits, promise to exacerbate the dollar’s slide. “The major overall trend is for the dollar to go down and for gold to go up. So, on an intermediate basis, gold shares are oversold,” Pamela Aden said. “This is the time to be buying gold shares. “And the worst is over in terms of gold’s recent correction. Gold is stabilizing above its 65-week moving average.” The advent of oil prices quadrupling in price from 1999 to over US $40 in mid 2004 is proving to be very inflationary, which is good news for gold prices. And the “oil crisis” that is related to supply problems in Iraq and terrorism in Saudi Arabia could yet propel crude prices to as high as US $60 a barrel, Pamela warned. Such an inflationary jolt would not only hamper the global economic recovery. It would likely also dampen enthusiasm for most equities, with the obvious exception of natural resource and energy stocks, she added. Meanwhile, Maryann Aden noted that interest rates have been “artificially held down” by the US Federal Reserve Board for quite some time and are now primed to begin a steady and perhaps rapid incline. Moreover, the rise in rates could drag on through to the end of this decade or longer. Meanwhile, any potential benefits for the US dollar that stem from higher interest rates will be offset by spiraling inflation, she said. “Then it won’t be long before the stock market begins to feel the heat. This situation could precede a long decline in the stock market.” All told, we are now entering an era that will place a premium on “hard assets” such as gold and other much sought-after metals, she said. Indeed, this somber situation is good news for ‘goldbugs’ with the prospect of bullion ending the year at around $430 or higher and with gold stocks riding on its coattails, she said. “As long as gold can stay about its technical support level at $378, then it’s going to go quite a bit higher,” Maryann concluded. |
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