CDN - Unearthing China's Multi-Million Gold Deposits

Gold needs 11 points for another explosion
Alec Hogg
Posted: Tue, 20 Dec 2005 08:07
Bullion’s backers won’t be sure whether to be delighted or nervous when seeing just how “mainstream” the metal is becoming, with media coverage transforming it ever so quickly from barbarous relic to investment magnet.
Although this newfound love for the metal is likely to attract many new investors – boosting demand and presumably prices – it’s also disturbing. The mass media has a history of endorsing investments just before a market busts.

That said, some traditional media skeptics are suddenly gold’s cheerleaders. A month after trashing the metal’s recent run, business television channel CNBC this morning ran a detailed insert explaining why gold is now in a long-term uptrend.

Another example of its popularity came in the weekend’s London Sunday Times which suggested gold could “blaze back to its all-time high”, extensively quoting gold’s supporters like GFMS’s Paul Walker and Newmont CEO Pierre Lassonde.

Despite its millstone of the mass media’s endorsement, technical analyst Issy Bacher remains convinced that the metal is truly on its bicycle.

Using the JSE Gold Index as his benchmark, Bacher notes the shares are trading at the same prices today as a week ago when the US Dollar gold price was $35 higher.

He reckons gold mining shares are “anticipating that the gold price is now going to consolidate and going to move up much further – that’s what they’re saying.”

The breakout he expects would see gold exploding in price and shares “doubling or trebling” in value.

Bacher says the next key resistance level for the JSE Gold Index is the 2 500 which it reached last Monday. After a 3,5% jump yesterday, the index is just 11 points away from that level.
Should the index break decisively through 2 500, Bacher predicts a rapid run-up to 2 800 (a 12% gain) and then 3 500 (40% above current levels).

He is not concerned about the market over-heating. Says Bacher: “The definition of a bull market very often is when the shares reach technically overbought, they keep moving, you expect them to move back and they don’t. They don’t obey the technical indicators – the technical indicators say it’s going to come down and it doesn’t.”
Perhaps a bit simplistic for those who prefer risking their heard earned savings on stronger fundamentals. And we’re reminded of many like Bacher who have also put their necks on the block only to have them chopped off.

But there’s no gainsaying the roll the man is on right now. His Cycletrends software has been uncannily accurate in predicting the price of bullion and gold shares during the past few months.