2007: DAYS OF
SILVER AND GOLD
©
Henry Weingarten Last Updated:
Note:
I
recommend also reading our previous gold post:
2006:
DAYS OF SILVER AND GOLD especially if you need more reasons to own gold.
WSNW
Subscribers should
periodically review our premium S:
Gold 2007
post.
8/22 WSNW ALERT:
Buy gold and silver: “Even the Silver I
trust at 11.51 (SLV) is likely to appreciate more than 15% over the next 6
months.
Of course selected gold and silver stocks should perform far better if we are right."
Watch our 2/07 VIDEO STREET.COM: Stargazing for Gold
H 1 2007
Gold Fair Value $642 =
Commodity: $550/580 + Currency: 620/640 + Inflation Metal:
$661 + Crisis FV: $734/800
H1 2007 Silver Fair Value is $14 as an Investment and $11 as a Commodity
HYDE
PARK SOAPBOX
If $400 gold indicates the presence of inflation, how can there be $600
gold
and virtually none? Must
it be $800 before the talking TV heads acknowledge what every living and
breathing
American knows: Living in the REAL world costs are far HIGHER than the official US government statistics pretend!
ONLY
GOLD IS AS GOOD AS GOLD
Our BIG play for 2005 and 2006 was gold.
Gold itself returned 23%, while favorite midcap stocks like Nova Gold
(NG) and Agnico-Eagle (AEM) returned 70% and 100% with a simple "Buy
and Hold" Strategy. While we believe gold and silver
will continue to reward long term investors, as in 2006,
markets do not move in a straight
line. 2007 will require even more active trading and hedging if the goal is
triple digit profits* and not simply double digits.
Note: We reached our first H1 2006 Gold Trading Target 1/2/2007- from
our December 22 Buy/Reversal of our November 9, 2006 Sell. Our next
or first 2007 buys centered on X {+/- one trading day). *
*AFUND trading advice is available to Platinum WSNW subscribers, Hedge Funds and QEP clients.
SILVER vs. GOLD
Silver is to Gold much like NASDAQ is to the SPX. It is
a smaller capitalized market, so if you crave volatility,
Silver’s for you!
Q1 2007 Silver will outperform gold. Over
time the Gold/Silver ratio will drop further to 46-44..We expect our
$14+ price target for Silver by March/H1 April 2007.
I would suggest 20% of your precious metal portfolio be
allocated to silver and silver stocks. Silver Instruments
should be more traded and when it out performs by 18% of more, Sell or
Stop it. Conversely, when it under performs by 18% or more, begin (re)
Accumulation.
GOLD FUNDAMENTALS: GOLD
INVESTING 101:
Two reasons investors should own gold:
1) Gold has outperformed the S&P 500 for the past six years in
a row. We expect that to be the case as well in 2007 and 2008.
2) With the US national debt BEYOND BELIEF, gold
has an upside potential that has not been seen since 1980, i.e., a once
in a lifetime opportunity!
In Q1 2007, you
should buy and hold gold as if 2008 were coming!!
The
most
often mentioned reason to buy
gold
is further dollar weakness.
Equally important, these
are extraordinary times, where geopolitical risk and outlook
continue to outweigh normal stock market considerations. Traditionally, geopolitical uncertainty, war and
global economic sluggishness have been good for gold companies.
Higher
mining costs are helping to drive up the price of gold. Gold
demand continues to grow faster than its global mined supply. Western Central Bank Selling is (more than) offset by Eastern Central Bank Buying. Gold buying
is strongly rising in emerging economies, especially India and China,
which are becoming two of the largest gold consuming nations, as well as
continuing strong demand from the Middle East. And just when will the Yanks be coming? In 2007/2008?.
Bottom line in 2007:
EVERY
investor will want exposure to the gold market.
We recommend
a 12%-20% long commodity/hedge allocation into 2007 depending on one's
global
portfolio risk/reward parameters.
While we use $550 gold and $11
Silver to evaluate mining companies, our H1 2007 Fair Value Investment
numbers for gold are $642 and $14 for Silver respectively.
TECHNICAL
Q1 2007: $630 Gold Pivot with $642 and $661 first resistance, and $610 S1, $600 S2 and $580 S3 Support.
XAU now has 140 PIVOT and 130 to 150 initial support and resistance respectively.
Note: Feb 1, 2 Triple Gold Conference Updates were $661 and 690 additional targets Q1 2007.
ASTROLOGY
Gold and Silver will continue to become more mainstream investments and
speculations of choice.
We expect higher prices than Fair Value in Q1 2007, but increased volatility as we evidenced in the first trading week of 2007.
HOW
TO MAKE BIG MONEY IF OUR FORECASTS ARE
CORRECT
No sector demonstrates the advantages of illiquidity better than the
gold and silver share market. In a rising gold market, small- and mid-cap gold
stocks tend to produce a much bigger bang than simply buying gold
itself. Ditto for Silver. When gold breaks through to new
multi-year highs, small cap gold stocks (as a group) are likely to
perform much better than either the big cap XAU or HUI stocks or the
metal
itself. However, investing in junior resource companies can be
especially risky. To minimize some of this risk, don't overload your
portfolio with junior mining companies. I recommend buying over time a
diversified basket of 10 small cap companies, all together
totaling no
more than 5%-10% of an overall aggressive portfolio allocation.
Note: You may wish to choose a mixture
of
early state exploration companies (highest risk/reward) with a strong
exploration upside ["bonanza"] potential with near production/early
production (lower risk) ones. Again this depends on one’s
personal
risk/reward profile.
SUMMARY
· We project gold higher, but more volatile into 2008.
· As a portfolio hedge, we
recommend from 12%-20% gold and silver for many of our model
portfolios. This would be done conservatively with a mixture of
physical
gold (GLD) and Silver (SLV) and gold majors NEM midcaps such NG and AEM. For even more
speculative
risk/reward, consider the larger silver companies like PAAS, SLW and
SSRI and the GDX Amex Gold Miners Index
(currently 36 gold and silver companies).
· We recommended that gold and
silver be
bought
on weakness and temporary US$ strength.
· If you love to gamble and
desire Las Vegas
style investing excitement, buy a group of 5 to 10 microcap stocks
that
are likely to soar should the public become as excited about gold as
they have about energy. Please remember however, that in early stage
drilling programs, the management, sources of funding, share
structure and promotional ability matter as much as finding
gold. For
a current list of small
cap gold
companies that
we are watching, please research the companies that present at our
Semiannual Triple Gold Conferences at the Princeton Club in New York.
Our long term recommendation remains the same: Own Precious Metals.
Gold is cheap insurance against both
inflation
AND a future declining US Dollar!
It is also beginning to resume its traditional "safe haven"
status
as well.
QUOTES IN THE NEWS
"Gold's going to be the phenomenon of 2007. If I had to
choose one commodity, I'd stick with gold.”
Michael Metz, chief
investment strategist, Oppenheimer
WSNW subscribers are invited to review our periodically updated premium
post: S:
Gold 2007.
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