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Gold's Down $50! Time to Sell?By
Wednesday, May 17, 2006
Gold’s lost nearly $50 bucks in just a couple of days, now down to about $690. Should you panic? Absolutely not. In the January 2006 issue of my newsletter True Wealth, I wrote about gold after it experienced a similar crash. What I said then absolutely applies right now...
So gold’s corrected $50 bucks. Big deal. What do we do now? We stick with the big trend... To me, we’ve likely reached the end of the first leg of the new bull market in gold. There are plenty of signs we’re there... Gold is finally being talked about. It’s finally quoted on CNBC. And individual investors are just starting to take notice. It’s about time. I’ve been writing about gold for four years now, and it’s done nothing but go up. Meanwhile, nobody has wanted to hear about it... until now. So we’ve finally reached the point where new investors will get shaken out (hey, it’s the way things go in markets, I’m sorry). However, I believe much higher prices will come. In the last bull market in gold, the first “big move” ended in 1973. But much higher highs were ahead. Remember, the bull market in gold didn’t peak until 1980 back then. Could we have another seven years to go in this gold bull market like we did in the 1970s? Easily... Don’t get rattled by the action over the last few days. It’s a bull market in gold and commodities. Plan on sticking around for the long run. Good investing, Steve Market NotesTHE END OF THE HOUSING BOOM? HOMEBUILDERS TAKE A BEATING If you need further proof the U.S. housing boom is slowing down, simply look at the list of stocks hitting new lows each day. For the past few weeks, the “New Lows List” has been filled with publicly trading homebuilding stocks. Higher interest rates are cooling speculation and increasing the cost of capital. The result is lower stock prices for builders like Toll Brothers (TOL), Beazer Homes (BZH), and Pulte Homes (PHM). The big drop in stock prices has left many of these companies trading for less than six times earnings, including one of the “big boys,” D.R. Horton (DHI). A severe technical breakdown: D.R. Horton (2-year chart): -Brian Hunt |
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