Agoracom

June 5, 2008.Gold View, it is so positive!!!.........Facts & Numbers to know!!!!! This is a reprise of an article that we put up last July, but the point is that nothing fundamentally has changed for the worse-only for the better!....... For years we have followed and tried to analyze and time the precious metals markets. We regularly discuss the gold market with excellent analyst friends as well as private investors who successfully have invested in the gold mining stocks for years. Every bit of information that we have been given is reflected in this analysis. And while we do a great deal of cyclical and technical analysis for the timing which is of the utmost importance, my analysis is always based primarily on fundamentals. I have synopsized several different factors that I believe will contribute to a superb market for the low cap mining stocks, which should be soon.

Here we go. We have the best fundamental "backdrop" for a bull market in the mining stocks that I have seen in years. But to keep it simple, I will simply list some of them and perhaps we can focus upon and ponder the positives.

1-The world gold supply is far below the demand, mine production is and will continue to be far less than world demand. The world's gold mines provide approximately 2500 tonnes a year in production; however demand is over 3000 tonnes. Gold production will be less in 2007 than in 2006. Output is unlikely to increase in the next several years despite expected increasing demand.

2-We now have many mines that are "dying" or simply stated, running out of gold. For example, South African production is down dramatically. Yes, even production from the world's largest gold producing nation is markedly lower than in previous years. Read that as a "lack of new discoveries that will be needed for world demand."

3- Note that when gold was selling at the $260 to $340 level, very little exploration was done by the mining companies. This has put the world in an inadequate mine production position today that has caused exploration to be resumed very aggressively. Properties must be found that will provide gold production. Aggressive exploration is now taking place throughout the world, but it is expected that it will take five to seven years to reach adequate production levels to meet world demand. That demand should continue to rise as investors and intelligent central bankers will prefer the hard asset of gold (solid things) to printed paper (currencies). Our analysis is that we are in a long term cyclical up move in commodity prices due to world demand. This is an historical occurrence. .....

4-We should add that the world's central banks do not want to see the price of gold running up. They can and do influence the price of gold, but they cannot control it. They want investors to accept paper and not hard assets. Gold has proven to be a harsh judge of the actions of the central bankers and they know it.

5-World investment demand is increasing. Throughout the world, investors want gold. India is one of the largest buyers of gold and we have noticed that their annual credit growth has exceeded 30% for the last three years.

6-The oil exporting countries have been huge buyers of gold bullion. That will continue.

7-"Real interest rates" are at very low levels. That is one of the most, if not the most important influence on the price of gold. I should mention that no business person that I know who manages or owns a company believes the US governments inflation numbers. Most say that inflation is in the 6% plus range. Maybe they notice that fuel costs that are up over 100% in the last three years. But of course, that doesn't count. They do not believe the "official" low inflation numbers-except perhaps for shirts bought at WalMart......

8- China has a "very low percentage of their reserves held in gold bullion" when compared, for example to the German and the French central banks and the US Federal Reserve. They have indicated that they will soon increase that percentage. The Chinese have huge holdings of US treasury obligations and even a small movement to increase their gold holdings could have a dramatic impact.

9-China's reserves are increasing at about $30 billion to $50 billion per month. The question is whether any of that will find its way into the gold market. We think YES.

10-Central Bankers Some are very capable and intelligent. And some are to be charitable, very inept in their judgement. British Prime Minister Gordon "Bad Timing" Brown, while serving as Britain's Chancellor of the Exchequer from 1999 to 2002, sold 395 tonnes of Britain's bullion holdings at an average price of $285 per tonne. It was over half of Britain's bullion holdings. But Gordon's billions of dollars of unrealized profits proved to be enormous gains for the buyers who had something Gordon was lacking, a true sense of value. Gordon had created a great opportunity for the buyers and they took advantage of it.

11-What a small market gold really is. For years, I have said to investors that "if one-tenth of one percent of the money invested in stocks was invested in the gold stocks, there would be an explosion up probably taking gold to well over $3000 an ounce. Another fact that few investors are aware of is that the two largest companies that trade on the New York Stock Exchange have a greater value in dollars than all the gold companies in the world. Think about that. Then let's look at the value of all gold produced in the world per year.... It is $54 billion, that's it. And the total of all gold ever produced in the world is 156,000 tonnes. That is small enough to fit into the end zone of a football field. That would be a Canadian Football League field, not the smaller NFL field. So one can see the potential for upmoves in gold, gold stocks and yes the small cap "juniors." Our analysis suggests that it will be soon.....very soon. Be prepared!

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