Feb 27, 2006 Milk the cow & feed the cow at the same time, says Harry Schultz 321gold

Harry Schultz Life Strategies
~ For THINKING humanoids ~ (in 80 nations)

Milk the cow & feed the cow at the same time

Harry Schultz
extracted from the Harry Schultz Letter [HSL] #652, dated Feb 12, 2006 - DJIA 10,919
posted Feb 27, 2006 -- Only US$382 for a 1 year! subscription

Gold
[written Feb 12, 2006] Emotions aside (!), not a lot has really happened to the gold price since HSL Jr. in mid Jan. Gold rose to new multi-decade highs, then fell sharply last wk, back to where it was a month earlier. But the mood & perception of gold changed, as a result of breaking new high ground-which caught public attention, plus the well supported exposé of the gold cartel by Credit Agricole, which won new troops to the gold army. Was the gold price drop last wk caused by being over-touted (in the media) & overbought, & with a bearish chart parabolic curve & bearish upwedge? Or by the gold cartel? Yes! Both. The price-fixers have chartists too (they run 2 of NY's biggest banks), & they know when any mkt (S&P, bonds, gold) is oversold or overbought, technically. So they know when to place their bets.

They (the so-called PPT-Plunge Protection Team) subsidize the US stock mkt when it sags to a major chart support area, which dare not break lest weakened public confidence causes a crash. And they know when gold has risen to an overbought level, so they sell it short. They usu [use U] to make money on this maneuvering for their de facto CEO, the US govt. After supporting the S&P, they can soon sell the stk index they subsidized, as the mkt carries stocks up from where they bought S&P futures, since others pile in when they see the bulk buying (usu at the close on key days). They also usu to make money on their gold shorts, by buying back after substantial falls. There is no free mkt. US govt prevents mkts having healthy adjustments, which correct inefficiences. Adam Smith is blackballed. It's yet another reason why investors have to trade these mkts rather than holding & trusting mkts to behave by rules of former times.

We had a similar gold sell-off in early Dec (lasting 7 mkt days & dropping $40), but last wk's was more significant as the rise went to historic highs & thereby changed people's attitudes, amidst much news coverage. People are also now aware that a general commodity & hard assets boom is underway, merely typified by gold. This correction may also drop $40, IMO, & will be of no importance except to allow the mkt to work off its oversold condition. Could it fall more than $40? Mkts can do what they like (as can the PPT), but there's technical gold support at 540, 530, 500, 490, 480, & the ultimate support at 460. There are people in the wings waiting to buy when the correction seems over. There are also bargain hunters who will try to 2nd guess the mkt. I think 530-540 is the most likely low.

••What makes buy&hold so pointless & disheartening? 2 elements work against it: mkts are controlled by speculators, including hedge funds, at the margin. They ascertain how far gold (or any such mkt) can rise before they decide it's overbought & they sell it & short it, which action then carries on via momentum.

That's how professional speculators & hedge funds make their living. With gold, we have the added burden of the govt swat team, the PPT. So, unless U aren't thinking clearly, U should sell when they do, or before if poss. (perhaps via our GoldCharts R Us svc). We take profits constantly! So we are always ahead of the speculators & PPT. We told GCRU subs to take profits a full week before this latest fall, in bold terms!

••·We're in a major gold bull mkt, thanks to excessive bank & govt credit & money creation, & govt deficits. Paper (fiat) money is in a systemic decline; hard assets/metals are in the ascendancy. For gold, $600 is our next target, then $900, on the way to $2,000. But U won't enjoy the ride via buy&hold. They will freak U out with their vicious midi crashes. U can't stand the heat if your gold stock drops 50-80%, & that's no way to invest anyway. Stop loss orders aren't the answer either. Preemptive profit taking is the way to win, which calls for constant selling & buying back. I sell 3-5 times a wk & buy 3-5 times a wk. There are always golds to take profits in & always golds to buy, on chart breakouts from small chart patterns. I milk the cow & feed the cow at the same time. Every gold has a diff personality & pattern. Study them as U would a child. See Uncle's Notes for Flash Bulletin.

Bye from your wagon master,
-Harry D (for Durable) Schultz

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