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Matthew Lynn: Goldman Sachs has gained too much political power
By Peter Brimelow
CBSMarketWatch.com
Monday, June 5, 2006
http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B8EB7BBB6%
2DB8E2%2D4F4B%2DB922%2D8229D1A02BC8%7D&source=blq%
2Fyhoo&dist=yhoo&siteid=mkwt
NEW YORK -- Advantage, Schultz.
The veteran gold bug called the recent gold break. Now he's getting
cautiously cheerful again. Long term: Hello, $3,000?
Harry Schultz of the International Harry Schultz Letter has been
publishing so long, since the early 1960s, that I regularly get
email from readers insisting that he must be dead. He denies this.
Dead or alive, Schultz is soaring right now. According to the
Hulbert Financial Digest, his portfolio gained 130.85% over the year
ending in May, vs. 10.6% for the dividend-reinvested Dow Jones
Wilshire 5000. Over the last five years, Schultz gained 21.94%
annualized vs. 3.63% for the DJ Wilshire.
Shultz's long-term record is much weaker, partly because the HFD has
sometimes found it difficult to follow his complex, sprawling, and
highly idiosyncratic publication.
Like most veteran gold bugs, Schultz has actually been quite careful
about the metal's rise, unquestionably from bitter experience. Last
time I checked, gold was about to break through $700 and he was
positively scary: "Price in near-vertical surge that increases odds
for a sharp & perhaps deep consolidation pullback. The 50%
retracement level on the run-up from July 2005 lows is currently
550, which coincides with intermediate closing support of the Jan-
Mar 2006 trading zone. Spinner & MACD [two technical indicators] ...
Chart bullish/overbought."
ut Schultz's macro conclusion was still bullish. The general public
was still asleep, he argued, and when they woke, the gold price
would rise more sharply than anything yet seen.
Gold went up a bit more, but then it broke, closing on Friday at
$636.80.
Schultz' latest letter arrived on Sunday night. He writes: "We've
dropped to a major support zone (620-592) where it will be
relatively safe to buy. ... So now I recommend increasing your
percentage of gold to 25-30%. But, as I'm not certain this
correction is over, please delay buying until the down channel is
broken."
In other words, Schultz wants this level to hold for a while.
But Schultz's long run is as apocalyptically bullish as ever: "My
view has always been: current governments (which are bank-owned)
won't voluntarily return to a gold standard, with its discipline on
money creation. But, when the price roars to, say $1,600, they'll
quite possibly be forced to do so, to appease a clamor for sound
money -- e.g. Bretton Woods II. The price could go to $2,000 while
they debate new rules. Washington insiders would see it as their
last chance to save the US dollar as a reserve currency. If they
don't, the euro, yen or yuan could make a bid for that status. ...
If no rules are made at $1,600, gold could keep climbing till they
do. Hello, $3,000."
Schultz has always advocating frenetic trading -- he says he often
buys and sells in the same day. He writes: "This market is going to
$2,000, but en route it will most assuredly crash 3-7 more times and
it's not smart to ride it down. Most people can't bear the pain when
their stocks fall 70% as they will if bullion dips only 30%, as it
often does."
Other veteran gold bugs, notably Dow Theory Letters' Richard
Russell, flatly say this can't be done. Russell wrote Friday that he
sold no gold or gold stocks in the recent break.
Right now, however, something is working for Schultz. As of Sunday
night, he was holding these gold stocks in his model portfolio:
Gammon Lake, Gold Fields, Glamis, and Yamana.
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Ted Butler silver commentary archive:
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----------------------------------------------------
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