"If/When gold gets above 330 it should get EXPLOSIVE, this is why we want to be positioned for a possible upside breakout in Gold and Gold Stocks." Dave Skarica, Addicted to Profits, on numerous occasions throughout 2000, 2001, and 2002.
"Turn out the lights, the parties over." Famous Texan Saying
For the past three years we have been waiting to use the above quote from Michael Hutchence, formally the lead singer of the Australian rock band INXS, as we felt it would perfectly describe the action in the gold market if and when the upside breakout finally arrived. Maybe we are being overly dramatic here but we believe that this quote combines everything that is going on today in the gold market. "Blood Money" A.K.A the gold shorts, all the disinformation and lies which are going on, those few of us who want to be shown the truth and finally, the bomb which is waiting to "blow this place apart" and is "gonna take this show away".
Over the past few years we have stated that when gold broke 330 it could cause the "mother of all spikes" as the short position just was and is so large. One thing we kept saying at conferences is that when gold breaks out it would be like an elephant going through a peep hole!!!
In addition, all throughout 2000, 2001 and 2002 while the "experts" (and we use the term very loosely) were telling us that "gold was dead and no longer mattered in the global monetary system" we were telling our subscribers to load up on gold and gold shares. Our words were of the John Madden fame that we should "NOT TO WORRY IF THE HORSE WAS BIND, AND JUST LOAD THE WAGON!"
Yesterday we saw the forces at GATA and Blanchard Coin Dealers sue JP Morgan and American Barrick for manipulation of the gold market for the total sum of 2-billion (American Dollars). As we have noted in the past we usually don't getting into theories of manipulation and the like. However, we could not deny the fact that there was a HUGE short position in gold and that in all probability this short position was made up of those who have a vested interest in seeing gold decline in price. Also note that we sold our Barrick for a slight perfect months ago. Also note that technically Barrick has been acting miserably so the market definitely knew that "something was up" months in advance. Please see the chart our chart of Barrick below:
We believe that gold has now begun a major bull market (we had believed this for the past 2 years, it was just the breakout above 330 dollars an ounce has now confirmed this belief). In addition, to the gold breakout we saw a U.S. dollar breakdown. The dollar fell below its summer lows over the past week. In doing so it (a) as just mentioned took out the lows of the summer which had been acting as a very important support level and (b) broke through the 7-year uptrend dating back to 1995 which we had discussed in our "Dollar Dilemma articles" on www.kitco.com.
For graphs of both the Gold breakout and Dollar breakdown please see the charts below:
Over the short-term it is really impossible to predict if gold will continue on this tear. The short position is so huge we could see another round of panic buying. However, we could also see a very vicious pullback. If we were gambling men (which we aren’t) we would be betting on the later. This being a pretty good pullback that will be followed by higher prices in January and February. If you are a short-term trader you may want to sell some positions, but longer-term players should stay long. A chart of the HUI gold bugs index is located below.
We are adding two juniors to profit from the "year of the junior" which we have declared 2003 to be. The juniors we are recommending are GoldBrook Resources (GBK.V) and Frontier Resources (FRG.V). In addition, we have finished writeups on four of our junior companies. Expect these to be emailed out over the next few days.
Note that the CRB has broken out above 237, therefore taking out its 2000 high. This marks the first time in the past 22 years that the CRB index has made a higher high. The next major level is the 250 area which is where the long term downtrend line lies. If this line is taken out then commodities will have begun a major up cycle, which would therefore make it IMPOSSIBLE for deflation to occur. At the moment we see deflation as an "old wives tale". Please see the long-term chart of the CRB Below:
On a final note please note that Dave Skarica will be appearing on ROBTV on Friday, January 20th at 6:30pm est on The Bottom Line’s Small Cap Stock Segment.
Addicted to Profits
December 25, 2002
Dave Skarica - At 18, Dave became one of the youngest people on record to pass the Canadian Securities course. At 19, he became a financial advisor and authors a newsletter entitled Addicted to Profits. In January of 1999 Dave's first book Stock Market Panic! How to Prosper in the Coming Bear Market, which foretold the end of the great U.S. bull market one year later, was published.
Dave began a newsletter called Addicted to Profits (available on www.addictedtoprofits.com ) and recently become a contributing editor to Canadian MoneySaver and Investors Digest of Canada. In 2002 he became a contributor to www.timingwallstreet.com . Addicted to Profits has been quoted in prestigious publications such as Barron's, The Dick Davis Digest, The Bull and Bear Financial Report and has been mentioned on CNBC.
Dave's most impressive market calls include a buy on Oil at 13 dollars a barrel in November 1998 within one month of oils' bottom. A sell on the S&P 500 in 2000 at 1415 on the S&P 500 within 8% of the S and P's high.
Skarica is a sought after speaker for numerous investment seminars and conferences throughout the United States and Canada and is an expert on the gold and commodities markets.