Dr. Clive Roffey
My short sojourn in London was too brief. It was a very nostalgic trip back to the city of my birth, evacuation during the war, and University education. So much has changed, but so much remains the same. Probably the most startling change for me was the development of the Canary Wharf complex. The last time I visited London in 1980 it was the derelict dockland warehouse area where no one except the locals went at night. But it has been transformed into the stainless steel, glass and marble mini Manhattan sky scraper fortress of the new brash financial district. No more the bowler hat and rolled umbrella brigade but a dynamic, vibrant city within a city.

My son's graduation at Oxford was extremely formal. There was continuous doffing of mortar boards and a very serious programme in total contrast to our more exuberant ululating ceremonies. The whole procedure was conducted in Latin which severely tested my old school day studies.

But I go away for ten days and the Rand decides to inordinately strengthen far in excess of all other currencies against the dollar. There must have been some serious buying of Rands for this to happen. I wonder if this is the precursor to a major takeover by a foreign concern?

Gold has, as anticipated by my Elliott Wave analysis forged ahead in the wave 7 of its nine wave move. At $525 we are fast approaching the point at which a breather is necessary prior to the final massive surge to above $600 next year.

The South African gold stocks have been restrained by the effect of a strong Rand, but this is likely to be a temporary situation and they are likely to catapult as they make up lost ground. I expect a powerful gold share market on the JSE going into the New Year.

Resource stocks remain locked into stable bull runs. There are no signs of any divergences or other top formations. Sure there will be corrections but the overall trend remains very bullish on resource stocks for the foreseeable future.

But the key to this gold share market on the JSE lies with Anglogold. It is very close to breaking above its April 2002 market high at the top of wave I. This signals that it is en route to the next bull market in wave III that is usually the longest and strongest. But the most important aspect of this data is that a break above the top of wave I by Anglogold will also force all the other gold stocks to do the same and move back above the top of their respective April 2002 highs. This even includes Durban Deep. There is a hell of a lot more to come in the gold shares.

But in $ terms it is interesting to note that Goldfields has already broken above its $16 peak of April 2002 and triggered the signal that the rest of the South Africans will follow in its footsteps.

As expected silver has rocketed to $9 and is well on its way to my $10 target. I have been bullish on silver stocks for a long time and it is now time to reap the real rewards.

Anglogold is the key to the long term future of this gold share market on the JSE. It has broken out of the confines of the flag pattern that contained it since the April 2002 high. The previous peak at R347 is a key level. This represents the top of wave I and a move above this will confirm that the whole gold market is on its way into wave III. Such a break would be extremely bullish for the whole gold share market.

The chart of Goldfields in $ in New York has just broken above its April 2002 peak. This implies that all the other gold stocks on the JSE will follow suit. Not only is this a powerful push above the top of wave I but it is also a major breakout above the huge red down trend across the share price tops since 1987. To say that this is a huge breakout signalling a massive upside potential for the JSE quoted stocks is a serious understatement!!!

Now compare the above chart with that of Goldfields on the JSE. It is miles away from the previous R171.50 peak of April 2002. If Elliott is correct this share price MUST go well above this level into wave III. I rate the gold stocks as having at least 100% capital gain potential for the next 12 months. We have not even started the real bull market run. Now you see why I am expecting this gold share market to start accelerating, not correcting!!

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Dr. Clive Roffey
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10 December 2005