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Suddenly smaller, Morgan is considered possible takeover target
Fear index to boost gold, say many
Bullion backers will present forecasts next month
By Thom Calandra, Editor
Monday, Oct. 21, 2002
SAN FRANCISCO -- Bullion believers are more convinced
than ever the precious metal will rebound strongly by year's
end and into next year.
The October stock-market rally has placed gold in a
danger zone -- in danger of falling back to earth after briefly
notching a 20-percent year-to-date gain. Yet the metal's
highest-profile analysts are preparing to tell their audience
they expect an explosive gold rally in coming weeks,
months, and even years.
quot;I expect it over $350,quot; says Douglas Casey, author of
quot;Crisis Investingquot; and editor of the monthly International
Speculator. quot;Fear and chaos are always the big drivers.quot;
Gold today was selling for $313 in the spot market. The
metal started the year at $270 an once and touched
$329.30 an ounce on May 31.
Casey and 36 other authors, strategists and fund managers
will gather early next month at the New Orleans Investment
Conference, an event that has catered to the counter-trend
crowd for 29 years. The event's founder, businessman
James Blanchard III and his National Committee to Legalize
Gold, lobbied in the early 1970s for private ownership of gold.
When then-president Gerald Ford took away the gold
prohibition, Blanchard's first conference drew 750 attendees
in 1974. Blanchard also co-founded a money management
business that held more than $1.5 billion of assets at its peak.
He also was co-founder and author of a number of
publications, including Louis Rukeyser's Wall Street newsletter
and the Gold Newsletter, which is in its 31st year.
Blanchard during the Richard Nixon years used to wave a gold
bar at authorities, challenging them to arrest him. He died in
1999. Brien Lundin, Gold Newsletter's editor, now runs the New
Orleans show. He says the conference's fortunes have risen
and fallen with the price of gold.
Attendance peaked in 1980 with 4,000 people. That was when
the gold price was near an all-time high of $840 an ounce. Low
points for the New Orleans conference were in the early 1990s
and in 2000 -- both low points for gold.
quot;Last year's New Orleans Conference was remarkably
successful, with national security experts correctly assuaging
fears of more expanded terrorist attacks, and with our
investment analysts accurately predicting more stock market
weakness and a resurgence in gold and mining stocks,quot; says
Lundin this year is bringing mutual fund pioneer John
Templeton to the gathering, via satellite hook-up. His speakers
list reads like a quot;Who's Whoquot; of the bullion market.
This year, the metal's backers will be challenged by a faltering
rally in bullion's price and in the stalled performance of gold
mining stocks and mutual funds. Some of the year's biggest
stock-market gainers through June were mining companies,
such as Harmony Gold Mining and Goldcorp.
quot;This feels like a bottom, and the gold stocks are at levels
that suggest they are sold out,quot; says James Turk, founder
of GoldMoney.com and a longtime gold newsletter editor.
quot;So for now, I'm continuing to give gold the benefit of the
doubt, and I expect that gold will be rallying by the time the
New Orleans conference rolls around.quot;
Turk's company, an electronic payment system, is
developing an exchange-traded gold fund that would act
as a proxy for the metal. The fund, to be traded in Canada
if it clears regulatory agencies, would make it easier for
individual investors to trade in the shiny metal. Turk
himself recommends investors keep their funds in gold
and cash, preferably Swiss francs.
quot;I am surprised that gold didn't rally as the stock market
tanked and the stocks of the big banks headed for single
digits,quot; Turk says. quot;But gold will rally for the same reasons:
trouble in the big banks, higher oil prices, a weaker dollar,
growing federal budget deficits. All of these things call into
question the U.S. dollar. That's why my Fear Index is rising.quot;
Not all of the New Orleans presenters will present the case
for a falling stock market and a rising gold price.
Peter Ricchiuti, assistant dean at Tulane University's A.B.
Freeman School of Business and a former chief investment
officer for the state of Louisiana, says he's quot;not very
optimistic about an increase in gold prices.quot;
Ricchiuti's Burkenroad Reports identifies undervalued
stocks in five states in the southern United States. He
acknowledges the economy and stock market have
reached quot;critical stages,quot; then explains, quot;This is the first time
in history I can remember U.S. businesses having more
depreciation than they do capital expenditures. This can't
go on forever or business will just disappear. I believe the
next two quarters will show a surprising uptick in business
and business spending.quot;
The low level of interest rates makes the stock market
some 40 percent undervalued, Ricchiuti says. As for
gold, quot;The rally we've seen in the last year is more
fear-related. Gold needs inflation in order to rise and it
is not just in the cards.quot;
Ricchiuti's top choices for investors are in the depressed
natural gas market. quot;Oilfield service companies and
exploration companies should benefit from coming higher
prices and much greater drilling activity,quot; he says.
On Tuesday, I'll present several more views from speakers
scheduled to appear at the New Orleans Investment
Conference in early November. They'll include LeMetropole
Cafe founder Bill Murphy, Gold Mining Stock Report's Robert
Bishop, Elliott Wave International's Steve Hochberg, Ian
McAvity of newsletter Deliberations on World Markets, Larry
Edelson from the Weiss Safe Money Report, and fund
manager Adrian Day of Global Strategic Management.