Ted Butler: The good news metal

Section:

By Gavin Maguire
Dow Jones Newswires
Tuesday, November 30, 2004

NEW YORK -- Gold is likely entering the second of
a three-phase bull market that should see prices top
$500 per ounce within one year and stretch toward
historic highs around $800 an ounce in the years
following, according to Wistar Holt, portfolio manager
with Holt & Shapard Capital Management, a
gold-centric money management firm.

In an interview with Dow Jones Newswires, Holt
argued that with gold prices just recently surpassing
the $450 per ounce level for the first time since June
1988, the gold market is entering a new phase in
which increased institutional and individual investor
interest will be gleaned while macroeconomic
conditions deteriorate.

The first phase of the current bull run took place from
2001 when prices bottomed out at historic lows in the
$250-$270 an ounce region and then clawed their way
steadily higher to back above $400 an ounce as the
U.S. dollar spiraled lower, the global economy wobbled,
and geopolitical tensions rose on terrorism fears and
war, Holt argued.

He added that further weakness in the global economy
and additional deterioration in the value of the U.S. dollar
is likely over the coming years to heighten gold's allure
as a dollar alternative.

"It could last for two or more years, but I think we'll see
more dollar weakness, the bond markets turn lower, and
a correction in the equity markets that will send investors
into gold," he argued.

He said such conditions will make gold an increasingly
appealing location for investors seeking refuge from the
fallout elsewhere, and a location for speculators to benefit
from a rising market. "Gold is the ultimate currency and
in times of economic turmoil it is the place to be," he
added.

"The beauty of gold mining shares is the leverage you
get when gold prices rise. Costs are generally fixed, so
when the gold price surges, that has an immediate positive
effect on the bottom line, which is reflected in the share
price," he explained.

"The appeal of investing in gold itself (through bullion bars
and coins) is the fact that it is less volatile and is good for
preserving capital," he added.

He said increased media coverage as well as more active
marketing of gold by investment advisers over coming years
should ensure increased participation levels in the gold
market, which, in turn, should help prices climb and
deepen the liquidity pool.

However, once "we get to the stage where everyone has
to own gold, such as in 1979 and 1980, then we'll be in
the third phase of the market and that will be time when
I will look to take profits and get out," Holt argued.

"I'm heavily into gold now because I see great potential,
but there'll be a time when that potential has been
reached and I'll move into something else," he said.

"But we're far from the top right now and I see several
years of a gold bull market ahead. In fact, I think we're
going to rise more quickly from now on and I'd be
surprised if we're not above $500 within a year," he
added.

Based in St Louis, Holt & Shapard Capital
Management was established in 2001 and has around
$50 million under management.

Around 70 percent of the firm's capital is invested in
mid- to large-sized, mainly unhedged gold miners such
as U.S. gold major Newmont Mining Corp., Canada's
Goldcorp, U.S. mid-sized producer Agnico-Eagle Mines
Ltd., Idaho-based silver and gold miner Hecla Mining Co.,
U.S. silver miner Coeur d'Alene Mines Corp., and South
Africa's Harmony Gold Mining Co. Ltd. and Gold Fields
Ltd.

Approximately 15 percent of the firm's assets are invested
in foreign government bonds, while the remaining 15 percent
is invested in funds that have short exposure to U.S.
equities, Holt told Dow Jones.

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RECOMMENDED INTERNET SITES
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AND PRECIOUS METALS
NEWS AND ANALYSIS

Free sites:

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http://www.financialsense.com

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http://www.depression2.tv

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http://www.minersmanual.com/minernews.html

http://www.a1-guide-to-gold-investments.com/euro-vs-dollar.html

http://www.goldcolony.com

http://www.miningstocks.com

http://www.mineralstox.com

http://www.freemarketnews.com

http://www.321gold.com

http://www.SilverSeek.com

http://www.investmentrarities.com

http://www.kuik.com/KH/KH.html
(Korelin Business Report -- audio)

http://www.plata.com.mx/plata/home.htm
(In Spanish)
http://www.plata.com.mx/plata/plata/english.htm
(In English)

http://www.resourceinvestor.com

http://www.miningmx.com

http://www.prudentbear.com

Subscription sites:

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http://www.goldinsider.com/

http://www.hsletter.com

http://www.interventionalanalysis.com

http://www.investmentindicators.com/

Eagle Ranch discussion site:

http://os2eagle.net/checksum.htm

Ted Butler silver commentary archive:

http://www.investmentrarities.com/

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----------------------------------------------------

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