hedged, page-6

Interesting segment of article..



Q. Last year you went on record early calling for gold to top $700, which it did. But you expected it to end the year at about $750. Currently, it trades at around $665. Why do you think it didn’t hold up? And, just for entertainment purposes, how high do you think it will trade in 2007?

A. I’m sure the government, directly and indirectly, did everything it could to keep the price down. The last thing they want to see is a gold panic. So the short run is hard to predict. But we’re still relatively early, certainly in terms of price, in what will be a bull market for the record books. It’s as if you can see the perfect storm brewing. Since I’ve been involved in the markets, there have been a number of times when things could have come unglued—‘70-‘71, with the stock market crash and the devaluation of the dollar, ‘73-‘74, with another market meltdown and financial crisis, ‘80-‘82, when commodities and interest rates both went through the roof, ‘87, ‘92, ‘98, the tech meltdown… Throughout that time, I’ve always tended to be a bear. In other words, I’ve tended to make my money during the crises; it’s relatively easy to make money during good times. As the tech boom proved, any i/diot who knows nothing about the markets or the economy, can do it.

My guess is that the next crisis is going to be breathtaking. And it’s not going to be just financial, but economic, social, military and political. Of course, I hope I’m wrong. If I’m wrong, I’m not likely to get hurt, for a number of reasons. But I don’t want to be inconvenienced if I’m right.

So where is gold going? I notice that it is starting to move counter to the equity markets in this current crisis, as it should given the inflationary implications of the massive government bail outs and the increased likelihood that the Fed will be forced to rates, making the dollar a less attractive holding for foreigners. I hate making predictions, but if things continue down this path, I think we could see gold going over $1,000 within the next 12 months, and maybe even before year-end. And then the mania starts for the mining stocks.



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