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August 29, 2006

A mid-term view on gold, and a pick, Tues., Aug. 29, 2006, 3:28 PM

With the release of the U.S. Consumer Confidence Report this mid-morning, and release of the FOMC notes this afternoon, the USD took a nose dive and precious metals rallied. UPDATE

3-day Chart of USD

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3-day Chart of gold

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3-day Chart of silver

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3-day Chart of oil

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I believe that the USD has serious challenges in the weeks ahead and that the recent pressure downward on precious metals, which was linked to weakness in oil, and confidence in the USD, will now stabilize and possibly rally.

My mid-term bias for precious metals is still firmly positive.

As you know, I believe that on weakness traders ought to buy the dips in the precious metals. I believe the riskier but better reward to risk is in the gold-related equities.

U.S Gold (OTCBB: USGL and TSX: UXG)

I continue to believe that the developing and senior prospecting companies offer the best share purchase opportunities. The list includes Rob McEwen's U.S. Gold, which took a big hit today. But now is the time to buy. Today ($6.26 USD).

Tomorrow, U.S. Gold joins the Toronto Stock Exchange listing group, and will soon likely join the Gold Miners Index. UXG will become a favorite of Canadian traders, including institutions that heretofore have been prevented from holding shares of a non-listed company.

Also, am I surprised the U.S. market rallied this afternoon? Not really; I called it this morning.

POST-CLOSING UPDATE:

Subsequent to releasing this article at 3:28pm, US Gold gained +4.6 pct in half an hour. Please don't write to ask if I still endorse it. Besides, I have a date with a surgeon in the morning, so I'm not in the best of humor.

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Posted by Posted by Bill Cara on August 29, 2006 03:28:07 PM | Category: Gold

Discourse


Time for a rally!

Below potential growth for 6 quarters!

btw gold's action was not that exciting this afternoon to be honest... up $3 on the news


Here's the minutes below...

- limited risk in deferring any necessary tightening
- recent inflation information not encouraging
- additional firming could well be needed
- growth may slow more than anticipated
- below potential growth may last for 6 quarters
- housing is downside risk to growth
- upside risk to inflation remains significant
- the sole dissenter Lacker said that he doubted GDP moderation was enough to reduce core inflation, and noted short term rates are down and low relative to the past-


tradesman

Posted by: Tradesman [TypeKey Profile Page] at August 29, 2006 4:18 PM [link]

Hi to everybody, this is my first post.
And first, thanks Bill for all you're doing and for the knowledge you share with us!

You push me every day to look for more (and open) information, and I found an interesting report I'd like to share: http://www.bmocm.com/common/scripts/getfile.aspx?fileID=6220
It underlines the current big reduction of liquidity to attack inflation, it seems to approve the efforts of Big Banks, and well they are not that bullish about oil and maybe gold.
Maybe the ideas are questionable, but I found the report very informative.

Well, I'll stick to my (yours!) ideas: gold prices should rise. But is it just for the falling dollar, or will it be a good news for European traders in gold, too? We will see...

Posted by: Lelik [TypeKey Profile Page] at August 29, 2006 5:37 PM [link]

Lelik,

Very nice find on that BMO report. It is excellent. If you read the entire report you will see that they ARE bullish on gold and in fact call for "biggest mining stock boom of all time" after this current period (2nd phase).

-JB

Posted by: JoeBarry [TypeKey Profile Page] at August 29, 2006 6:39 PM [link]

Bill,
Good luck and best wishes tomorrow.

Posted by: ghosalb [TypeKey Profile Page] at August 30, 2006 12:14 AM [link]

Bill

Best wishes on your health. Thank you for all that you do.
Rick

Posted by: rick s [TypeKey Profile Page] at August 30, 2006 12:21 AM [link]

Bill:

Thanks for the heads up and the ride up with USGL. May this find you smiling ;)

Posted by: C.Note [TypeKey Profile Page] at August 30, 2006 6:26 AM [link]