Gold

The correction from the April 2007 high in gold gave us an extraordinary opportunity last summer to accumulate mining shares while they were truly undervalued. Simplicity, our premier gold timing model, was the key. Nevertheless, gold and silver investments still remain all but undiscovered by the mainstream investment community.

The most underbelieved asset class today is precious metals, but they are beginning to gain serious investor attention again as gold moves to all-time highs over $850. The next major move is just beginning. Once the current rally takes a brief rest, gold will advance to at least $1,000 during 2008 on its way to eventually hitting $1,600.

Gold will soon become popular cocktail conversation as the mainstream begins to catch on.
This August, we received a rare buy signal from our gold timing model, “Simplicity.” The previous time Simplicity gave a buy signal was in May 2005 when gold was $440. The average annualized gain after Simplicity buy signals is 89.6% … and they say no one rings a bell!

The time is ripe again for precious metals.

Fundamentally, gold and silver couldn’t be more bullish. The U.S. dollar is weak; and as the dollar falls, gold will rise. That is cast in stone.

China (as I mentioned) is on a buying spree with billions of dollars in excess cash. To come up to speed with the rest of the central banking world, it is estimated they will need to purchase 2,000 to 3,000 tonnes of gold.

Although the mainstream has not warmed up to the metals yet, we are experiencing the third great gold bull market of the last 100 years. The first was from 1929 to 1932 where we saw the price of the average mining stock increase 650%. In the second, from 1969 to 1980, the typical mining stock appreciated by 1,000%.

The third secular bull market in gold is under way (it's far from over), yet the Philadelphia Gold and Silver Index (XAU) has but barely begun to perform. You will likely see the XAU double this year and appreciate 300% from current levels by the decade’s end.