I wish you all a festive and profitable New Year.

Last year was a series of subtle contrasts. The early half wallowed in negative territory. A bottom occurred in April and the rest of the year was devoted to a sustained rally with some of the lesser sectors performing excellently. But it was a year of steady movement.

I look for 2004 to be a diametrically opposite year of dramatic contrasts. Usually the impetus of the previous year carries through to the first quarter of the New Year. But in the current case I believe one can draw a line through the trading of Jan 2nd and state that this day marked the end of one cycle and the start of a completely new and opposite phase with overtones of vicious movement.

At some stage during 2004 I look for :

• The Dow to drop 3000 points from its current 10 500 level. I am not interested in the fairy tale of a presidential election year. There are far greater negative forces in play than a once off election.
• The gold price to move about 30% to well above $500 with silver up 50% to touch $9 but platinum only gaining 20% to hit my already published target of $1000.
• Silver to be the top performing precious metal for the second year running with platinum the laggard.
• Precious metal stocks to completely out perform global equities, especially the Dow.
• One of the most dramatic economic moves should come from the oil price as I look for at least $40 per barrel to be reached during the year.
• I expect the South African Rand to continue to weaken, and from being the world’s strongest currency in 2003, to become it’s weakest. I look for R8,50 to the dollar at some stage.
• The dollar to continue to weaken against the Euro to at least $1,35 with $1,40 a distinct possibility.
• One of the most significant moves of the year should be the rand price of gold. Currently it is trading at R88 000 per kilo. Even the most marginal of all the major producing mines, Durban Deep, is making a profit at that level. But my target of at least R120 000 per kilo during the year will send the South African gold stocks into orbit.
• South African gold stocks to out perform the North Americans with Drooy at the forefront of the charge.
• I have continuously detailed that the South African gold shares MUST move back above their peaks of April 2002 and this I expect to witness during the year. Some of these gold stocks should appreciate well over 100%.
• Interest rates to rise during the year putting a dampener on equity growth and confirming that inflation is locking in on global economies.
• 2004 should be a year of precious metal share dominance in global markets.

I look for 2004 to be a year of dramatic change and dynamic movement. Gold and Silver stocks should be close to the top of the performance list with resource stocks in close attendance. I expect to see general and global equities lose considerable ground.

Dr. Clive Roffey

8 January 2004

chartist@global.co.za
www.shareaction.co.za

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Gold Action is a fortnightly commentary on global gold markets produced by Dr. Clive Roffey who has been a leading independent commentator on gold markets since 1969.