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Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Uranium Targets $150 whilst Gold Investors Worry

Commodities / Gold & Silver May 31, 2007 - 09:45 AM GMT

By: David_Vaughn


I know this subject probably gets boring to hear about, but it is still at the top of the charts so it deserves coverage.

We are talking about uranium of course. But what about gold? Everyone is panicking over gold and I can tell by the emails I receive that many are wringing their hands in worry and anxiety. Do I know what gold will do tomorrow? Yes, I do. It will do what it wishes to do regardless of projections from optimists or the dooms day club.

But realistically? My mind cannot help but go back to those humble days when gold slid to the low 250s. And then in the fall of 2005 gold finally after ages it seems ascended 500 dollars an ounce. A figure it had not reached in a very long time. Ultimately, gold will do what gold wants to do.

Let's be honest here and provide a comment of public sentiment now about the gold price. The following below is a good example of how many are panicking over the gold price.

Dave, “Odd you didn't mention gold.  Is that because it's declining as we speak and soon to take out 630 at which time according to the Aden Sisters the gold bull will be over.  Obviously all this coiled spring approach to gold was wrong.  Why not come out and admit it.” John F.

Let's listen to what gold analyst Bill Buckler has to say about the present direction of the gold price. This man always is right on the money.

Bill Buckler - “Gold (and its holders) have nothing to worry about anyway. Gold as money has outlived the collapse (violent or otherwise) of countless empires. One more won't make much difference. The one difference is that the building up of the US Empire has distorted the global financial and monetary system to a FAR greater degree than any of its predecessors. That makes the "potential" for Gold that much greater than it has ever been before. Right now, it's worth the wait.” “As we stated here two weeks ago, these are the numbers to watch out for:

  • 80.60 - the USDX post 2002 bear market low set at the end of 2004
  • 80.00 - the USDX "floor" ever since the beginning of the fiat currency era in 1973
  • $ US 692.00 - the 2007 spot future closing high for Gold
  • $US 721.50 - the post 2002 bull market spot future closing high for Gold set in May 2006 Click

I continue to look at gold as more than a short term phenomena. I look back at those 20 years that constituted a bear market from 1980 to 2,000. I just don't see gold heading back to gold's bottom in the low 250s. But what do I know? Only God above knows for sure either our future or gold's'.

So let's sit back and watch.

But let's go back to uranium as that is definitely the most exciting commodity at the moment. Uranium appears on a tear that continues to gain momentum. What do I think uranium will do tomorrow? Uranium is harder to figure out as it is not a controlled or manipulated market. So in real terms the price action is for real and on the level and generated primarily by real supply and real demand factors.

“The price of uranium could reach $150 this year or next, but should ease over the longer term, the chief executive of Denison Mines Corp. (DML.TO: Quote, Profile, Research said on Wednesday.” “Shares of small-to-mid tier uranium players such as Toronto-based Denison, SXR Uranium One (SXR.TO: Quote, Profile, Research and Mega Uranium (MGA.TO: Quote, Profile, Research have soared over the past year, as uranium prices jumped to levels last seen in the 1970s on strong demand that has outstripped the industry's ability to produce.” "(The price) keeps climbing every couple of weeks at least," he said.” "You're going to see, I would suspect clearly, $150 a pound and probably a push beyond that." Click

Paul Newman even puts his blessing on the US nuclear industry.

“…legendary actor Paul Newman…” Mr. Newman reported as follows: “I recently toured the Indian Point nuclear plant and I expected to be shown safety and security at the plant. But what I saw exceeded my expectations. No Army or Navy base I've ever visited has been more armored and I couldn't walk 30 feet inside the plant without swiping my key card to go through another security check point. There was security at every turn, and the commitment to safety is clear.” “We agree with both Mr. Malone and Mr. Newman that nuclear power will be more important for the anticipated dramatic electricity growth in the future.” Click

Below is an interesting comment from a reader.

David, “I enjoy reading you....whenever I spy your name, I always pull up your article and settle in for a good read.” “I've been burned by other gold writers .... writers I've admired, when ---- out of the blue, have read something they've written that's so dang vitriolic about George Bush or the war, I have been literally stopped in my tracks and stunned into amazed and puzzled silence!  Most recently, xxxx xxxx, in the concluding paragraph of his latest piece "Don't Cry for the US Dollar", wrote of George Bush contracting a "case of poison ivy in his private parts" .... "during the rape of an innocent girl"....  (Say what?  ...!!)   I've read Mr. XXXX's articles before, presumed him to be a rational human being...and then BOOM!--out of seeming nowhere comes sheer irrationality.” “What do you suppose accounts for such vitriol?”    “I'm curious as to your thoughts…” Dave W.

Like my barber always tells me, “Too much information.” “Don't have time to be angry and cold, heartless and ruthless. Just appreciate the good and let go of the bad. Hope I answered your question!” Dave

“I am convinced that the sack of Rome five years ago (410AD) by the Visigoths, even though they withdrew after a few days, was a signpost to the future. Rome is going down; its era is ending…”Norman F. Cantor, Antiquity


“I am convinced that the sack of New York City five years ago by the Islamic terrorists, even though destruction was limited to one cruel day, was a signpost to the future. The United States is going down; its era is ending…” David Vaughn

Remember legendary Market guru Jim Rogers? Jim Rogers co-founded the Quantum Fund with billionaire investor George Soros and has focused heavily on commodities since 1998.

“The commodities bull market has another decade to run…”

“People don't understand what happens in bull markets. You're going to have some big reversals and changes and a continued explosion in the price of commodities.” “He believes the US dollar is heading the way of the Dutch guilder and Spanish peso, both once the world's reserve currencies.” “Get out of the dollar, teach your children Chinese and buy as many commodities as you can.” “Sometimes I wonder if our central bank is just going to print money until we run out of trees."

The following below is a good and astute comment from a reader.

Dear David, “I've read many of your posts on XXXX over the past year. I've owned gold & silver bullion since 1989 and just in the past 1 1/2 years began buying stocks based on Doug Casey's recommendations. I've done OK, but I've watched profits come and go because I just don't know when to sell…” “Casey usually recommends selling half on a double and I've been able to do that a couple times, but I know I should be doing better…” “I used to think $200 a year was a lot when I joined until I got the first double.” “When I told some friends that I paid that amount for a subscription to speculate, they thought I was crazy, but none of them ever came close to a double in their blue chips and mutuals.” Steve

Continue doing what Doug Casey tells you to do. If he recommends you to sell half a stock when it doubles then do so. The man knows this business. Otherwise you're wasting your money subscribing to his material. Do what the man tells you.

“According to the Nuclear Energy Institute (NEI), license applications for more than 18 new reactors could be filed by a dozen energy companies by 2009.”“If we go at it the right way as an industry, I think it can be terribly successful.” “…the renaissance will emerge several years down the road. Probably on the order of five to ten years to get the real production to where we want it to be, Malone said.” “Malone firmly believes there will be a nuclear renaissance in the United States . We need electricity…” Click

And let's take a pause here to remind us of the good ole US debt.

“Taxpayers on the hook for $59 trillion.” “The federal government recorded a $1.3 trillion loss last year — far more than the official $248 billion deficit — when corporate-style accounting standards are used, a USA TODAY analysis shows.” "We're on an unsustainable path…” “Bottom line: Taxpayers are now on the hook for a record $59.1 trillion in liabilities, a 2.3% increase from 2006. That amount is equal to $516,348 for every U.S. household. By comparison, U.S. households owe an average of $112,043 for mortgages, car loans, credit cards and all other debt combined.” Click

Did you just read the above financial analysis? Naaa. Who needs gold. This ole' US debt bubble can grow to eternity and the friendly folks at China, Inc. will always be there to buy US debt. What, me worry?

“Gold has a universal appeal and value, he says, and recommends people put an average of $5000 or $10,000 aside in the precious metal.” “It's always a good time to buy gold," he says. "Five years ago it was worth $200 plus, now it's worth $600 plus." “…NZ Mint is predicting gold to rise to more than US$1000 in the coming 24 to 36 months - it currently sits just below US$700.” “Overseas investors have about a 10-12 per cent exposure to gold in their investment portfolios and pension funds in America have an exposure to gold, says Sutton, who believes that an exposure of between 8 and 12 per cent of a portfolio is about right.” Click

Should gold bugs and friends of gold in general wish for a total financial meltdown in this country?

“A collapse in the dollar and a corresponding total decimation of the US economy would leave the world rudderless and chaos could ensue.  Let's hope it doesn't happen.  Gold investors should wish for an orderly rise in the price of gold, rather than a dramatic one. Perhaps Central Bank intervention may help this be achieved.  I, personally, do not think that Central Bank activity can significantly depress the gold price long term, but it can mitigate against the kind of dramatic increase which could be the precursor to worldwide financial collapse which would, in reality, be to the benefit of no-one.” Click  

And one more plug for dear uranium?

“A top Russian nuclear expert said Monday the world price for raw uranium may continue growing at the same pace as in past years, driving prices up at least 10 times more. "The price of raw uranium has grown 15 times in the past years, from $20 to $300 per kilo. I think it may still grow by another order of magnitude," Yevgeny Velikhov, head of the key Russian nuclear Kurchatov Institute, told a RIA Novosti news conference." Click

There's a lot happening today on the world scene. Most of the action is so subtle it occurs un-noticed right under our nose. Only the shock news and entertainment driven events catch our attention on the evening news. In the ocean we notice immediately when the waves are so high their surf is tearing the beach apart and sinking fishing boats. But the really dangerous and most significant actions are unseen riptide currents occurring under what appears on the surface to be calm water. That describes in great detail world politics today. And it is that subtle quiet under current and riptide effect that will continue to make uranium, gold and all the resource stocks so popular as the years progress in the new century.

Recognizing that we are in a new investment era that is changing the way we invest Gold Letter, Inc. reviews undervalued gold, silver, uranium and other resource stocks under valued and poised to rise in this time of increased demand for all resources. Gold Letter's 10 best performing stocks are up over 2,000% and GL's top 50 performing stocks are up over 500%. GL charts are computer generated and updated every hour while markets are open.

Click here to order Gold Letter

“The Worldwatch Institute, an organization that focuses on environmental, social and economic trends, says the current rate of global demand for resources is unsustainable.”   Click

Send me an email.

By David Vaughn
Gold Letter, Inc.
Click here to order Gold Letter

The publisher and its affiliates, officers, directors and owner may actively trade in investments discussed in this newsletter. They may have positions in the securities recommended and may increase or decrease such positions without notice. The publisher is not a registered investment advisor. Subscribers should not view this publication as offering personalized legal, tax, accounting or investment-related advice. The news and editorial viewpoints, and other information on the investments discussed herein are obtained from sources deemed reliable, but their accuracy is not guaranteed. © Copyright 2007, Gold Letter Inc.

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