.. . Harry Schultz Life Strategies Harry Schultz November 1 2002 Extracted from the Oct 28, 2002 issue of HSL628 Gold How times change. A few years ago Merrill Lynch refused to take orders for gold shares. Now a Merrill Lynch analyst is projecting $550 an ounce gold or more. Merrill analyst Don Murphy said on CNBC (of all unlikely places) "I'm inclined to think gold is making a secular low, a buy of a generation. To be conservative, I'm saying $450 to $550, But my thought is gold could go back to challenge the 1980-81 levels at $850." As it happens, he's right. A reader sends short interest data for gold shares over last 12mos showing enormous jump. He concludes these shorts "could be setting themselves up for the biggest short squeeze of all time!" He notes Agnico went from 1.5mil to 5mil shares short. GG & DROOY have increased by 4,000% in 1 year. Well, yes these shorts have to be covered, but it's partly just neutral. Most of the shorts are insurance taken by people/hedge funds that are long the stock & go short as a hedge. They are far more likely to be gold bulls than bears. When gold rockets, some will gradually cover shorts & slowly sell longs. Things are seldom as black & white as they seem. Recent gold price action has been corrective of the prior upsurge. Only those who got in late are squirming. But chart patterns are positive. Just as stocks are correcting a fall that was too fast/far, golds have done the same in reverse. I would not disturb core positions. U should actively trade 1/3rd of your gold portfolio, hold 2/3 intact & add to the core now if underweight. If any individual gold stock has fallen to a stop loss point in your core, I would hedge it. (&/or use current weakness to average down). Eg, I shorted bullion in futures mkt when it broke its uptrend, just for insurance, though I was sure (based on charts & tech analysis) it was/is a correction, not a reversal. Other ways of hedging: best is short the stock. Can also buy puts on some stks. If U actively trade 1/3rd of your gold pf it means U sell into strength (& buy back on weakness & resell on strength, etc). Those sale profits will in time pay for the cost of your core position & U end up owning a gold portfolio at zero cost! That should give U incentive enough to learn how to trade them. U can wing it yourself or subscribe to my GoldChartsRUs. Compromise: take GCRU for 1-2 years til U hone your skills from our examples & advices. As I believe this gold bull mkt will run for about 5yrs, it pays to prepare & play it properly. Profits should be immense. (Read an extract of Gold Charts R Us here.) The monetary world may enter a new paradigm next year. In June 2003 a bookkeeping gold dinar & silver dirham will enter the stage. A dinar will contain 4.25 grams of gold of 22 carats. The dirham will be 3.0 grams of sterling silver (or 0.925 pure silver). Malaysia has retreated from its original minted coin plan, under western pressure, IMO. There will be 4 stages for the transition from fiat to metal currency says the non-govt World Islamic Trading Organization. They say "Gold offers stability & order. Gold is the end of political money." Perhaps the die is cast at last! Let the sparring begin. Download these 5 sites for info: Islamic Mint / Ikim / Mineweb / Khilafah / Freelists. The gold dinar plan is still taking form among several Muslim nations. It's a period of conceptualizing a new monetary unit that will lead to a real gold-in-hand system. The anti-freedom forces (Western bankers) are fighting it, but the odds are with the Muslims, who have the numbers, the faith (in gold), & the oil. Not to mention determination born of centuries of frustration at the western-controlled fiat system. Stopress: It's either a rumor or a tipoff. I'm told Barrick has been selling gold to force the price down so they can cover some of their huge short-hedge position at more favourable prices, or perhaps not cover if they prefer a gold bear mkt for their hedging strategies. My source says "ABX seem to want to kill gold; they seem to be gold's enemy, for if they force it much lower the chart could turn bearish." If I owned ABX, I'd get on the phone to them today & tell them to back off. © Copyright 2002 Harry Schultz Life Strategies Harry Schultz Life Strategies This is the original international newsletter, 39 yrs old & a gung-ho freedom fighter, gold advocate & stock/bond/futures mkt trading/analyst advisor. HSL also deals with where U should live & how (originator of "PT" strategy--Practically Transparent). HSL is heavy on geo politics, intelligence-guided health, trading stock/bond mkts, living everywhere & nowhere, contrary opinion oriented & chart laced. Harry Schultz has been in the Guinness Book of Records for 22 yrs as the World's Highest Paid Investment Consultant. You can get his advice for just $199 for a 8-mos trial-peek subscription. Or normal 1 year price of $285. Or a lifetime sub for $2,400. HSL is available via e-mail, fax, or mail. To increase profits by 300-400% subscribe to our new weekly 'Gold Charts R Us' (GCRU), (18 gold charts each Wed, with buy/sell guidelines) - sent weekly by Email - $US100/mo for 3, 6, 9, or 12-month subscription periods (fax +$120 per 3-months). Read an extract here. U can sign up online or subscribe via fax or mail. Contact: E-mail: HSLmentor@racsa.co.cr Fax: Monaco (377) 97 70 31 48 Mail: POBox 622, CH-1001-Lausanne, Switzerland Harry Schultz November 01, 2002 _________________ posted at 321gold