We would like to examine today how right or wrong we were and where we stand on the road of the still young bull-market in precious metals.

The long-term picture

The up-trend in the price of gold, which began early in 2001, does not show many signs of weakness. On February 5, the gold price reached a recovery high of $ 388.90, a level which could not be sustained. By April 7, the gold price had fallen back to the level of $ 318.75, and many people believed that this was the end of the gold bull-market.

But the correction ended where it had to end, exactly on the trend-line and confirmed, by doing so, the up-trend channel. From the $ 320 level, the price began moving up again, peaking this time at $ 374.40 on May 27.

The present correction may take us down to the $ 330 level. Nevertheless, arguing that the higher we go, the further we drop and the recent surge being smaller than the previous one, we would rather assume that we have already seen the correction low at $ 342.40 on June 27.

The likely scenario, in our mind, is that the gold price will move up towards $ 380 during the summer for an eventual attack on the psychologically important $ 400 level.

While charts show what is going on in the market and what the likely future course may be based on past experience, one should never forget that most events cannot be forecast and lots of things may happen of which at this stage we have no clue.

But such an "unforeseen" event will be negative rather than positive and could easily propel the price of gold to much higher levels.

The medium-term picture

Medium-term, we notice the peak attained in February, a level which at the time simply could not be sustained and has to be linked to the war activities in Iraq, the quick military victory of Goliath fighting David and when GWB showed to the world that The Ten Commandments were not meant for him and his crew.

By now, every American watching television has learned that there was no victory, that they are not loved and that the fight against the occupying forces has just began.

In view of the huge problems facing the world, we are sitting on a time bomb. If we only knew when it will be set off!

Therefore we repeat that it is unlikely that the low of June 26 will be penetrated. If it did, we would still not be worried unless we actually start trading below $ 320 for more than a week.

The short-term picture

We can basically repeat what we wrote on February 26: "Most likely, the correction down from $ 390 has run its course. Nevertheless, we cannot exclude a further round of selling which could bring the price down to the $ 325 area. Those who believe that we are in a long-term gold bull market should not put off buying in the idle hope of buying ten dollars cheaper."

We only have to change the numbers a bit as suggested by the chart.

Are US markets fundamentally cheap?

Historically, a FAIR valuation of US markets has indicated a dividend yield of 4% to 5%. Dividend yields at present, however, are still at less than 2%. Historically cheap US markets yield upwards of 6%. The answer to the above question is therefore simple: NO! As pessimism spreads, gold will rise, the dollar will fall, as will as the major US indices .

The following recommendations were valid at the time of writing, viz. at

and may no longer be pertinent at the time of reading.

If you wish to receive our Follow-ups on the above gold producers and explorers, simply register at www.pzim.com.

Peter Zihlmann
July 9, 2003

PS. Are you a gold-bug? Remember that most do not share your believe in gold. On July 5 th , 2003, the respected Swiss newspaper "Neue Zürcher Zeitung" wrote under the title "Gold als Heilmittel?: " Cogent reasons to buy gold investments are as few as ever. We shall see who will have the last laugh.

Disclosure: The author has not been paid to write this article, nor has he received any other inducement to do so. The author is a shareholder in the company and will benefit from any increase in the company's share price. Disclaimer: The author's objective in writing this article is to invoke an interest on the part of potential investors in this stock to the point where they are encouraged to conduct their own further diligent research. Neither the information, nor the opinions expressed should be construed as a solicitation to buy or sell this stock. Investors are recommended to obtain the advice of a qualified investment advisor before entering into any transactions in the stock.

CURRENCY TRADING

Go to our recommendation at: http://www.pzim.com/db_files/pzim_intro/1_4_GBPUSD-3h.pdf

FUTURES TRADING

Go to our recommendation at: http://www.pzim.com/db_files/pzim_intro/7_6_Dow%20Jones-2h.pdf

PRECIOUS METALS TRADING

Go to our recommendation at: http://www.pzim.com/db_files/pzim_intro/5_4_Silver7h.pdf

MAKE PROFITS IN RISING AND FALLING MARKETS!

Identify the trend as early as possible and ride it as long as possible. Read also our FOREIGN CURRENCY TRADING STRATEGY. Go to www.pzim.com , FOREX TRADING, Presentation, "download presentation."