Gold Shares Poor Barometer of Gold PriceT

May 1, 2003
Jim Sinclair

Gold flew to the top of the next resistance range of close to $344 as gravity took hold of the dollar. The US dollar is in serious trouble as the Exchange Stabilization Fund (ESF) gets pummeled daily as it enters the market to make the dollar look better. If the .965 to .975 level is unsupportable, then a free-fall is a real possibility.

I feel sorry for the good people that have been run out of their gold shares because of the uninformed commentary that appears on so many websites and from the many snake oil salesmen who also don't understand how gold works in a deflationary monetary world. Those same salesmen base their case on a history that is totally flawed and never existed in gold. Gold is a tool to fight deflation just as much now as it was in the 1930's.

Again, I recommend that you have a firm view on gold based on facts, not hype, not fear and not who speaks the most eloquently. Stop bouncing from advisor to dvisor and select one you can believe in and trust.

Jsmineset has a point of view. Gold is money. As gold becomes a commodity, it is "worth less" simple as that. As gold becomes money, it becomes "worth more." As the dollar fails, gold functions. We are in an awful long-term bear market in the dollar with a first price objective on the downside of USDX .72.

Gold shares, if you wish to trade them, are to be sold into strength not weakness. You buy gold shares during weakness, not strength. Do that and you will, in my opinion, stop losing. Period!

Gold funds are as much idiots as anyone. They were big sellers of good gold shares and good juniors into weakness, pounding them lower. I suggest you only invest with professionals who demonstrate an ability to sell into strength and buy on weakness.

Among the tops in their fields are Schultz (www.hsletter.com), Guild (www.guildinvestments.com) and John Embry of Sprott Securities. Don't waste your time on anyone else.

Note: I have no financial relationship with anyone I recommend. But I do have a great respect for disciplined individuals with high ethical standards and a history of accomplishment - especially those mentioned above.

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