-->PS - Commercials continued to add shorts last week; HUI's defiance very interesting -- will it continue?

Kaplan:

GOLD MINING SHARES WILL CONTINUE TO MAKE A VERY BULLISH PATTERN OF PROGRESSIVELY HIGHER LOWS (July 4, 2005): In the past week, HUI, the Amex Goldbugs Index of Unhedged Gold Mining Shares, made two higher lows in its recent very bullish sequence, following the completion of its extremely supportive double bottom of 165.71 on May 16, 2005 (the previous bottom was 163.81 on May 10, 2004). On June 28, 2005, the HUI low was 193.20, which was 2.20 points higher than I had predicted (shame on me for being off by more than 1%), and then on July 1, 2005, the HUI low was 196.25. Both lows were followed by strong rebounds later the same day, which is positive charting action. HUI is currently at 202.06. The next higher low for HUI is likely to be just above 200.30, since that marked the first important low of this year on January 6, 2005, and should be followed by an extended rally to 250 by early September, as gold eventually settles temporarily near $450 an ounce, and the HUI/GLD spread narrows to around 200. Readers
of this web site who are recently returning from an extended life-affirming sojourn on an uninhabited, internet-unfriendly island (are there any other valid reasons why readers would not already be heavily invested?) should use this opportunity to complete their purchases of gold mining shares, since it will be needlessly expensive to buy them once HUI is at 220 or 240, even if HUI rallies above 330 in 2006, as I anticipate.

BUY BOTH GOLD AND SILVER (July 4, 2005): The price of gold has retreated from a recent high of $443 to Friday's July 1, 2005 low just under $426, and is therefore less than one percent above its critical resistance level of $422-$423 from 1988-1996, which is now very strong support. Gold is therefore ideal to purchase as long as the price is below $430. A concentration of stale speculator sell stops in silver futures very close to $7 were hit on Friday, July 1, 2005; therefore, silver plunged rapidly to as low as $6.84 before closing near $6.85. Silver, like gold, is also slightly above important support, and should be purchased as long as its price is below seven dollars an ounce, as it is likely to increase more than gold in percentage terms over the next year. A number of precious metals analysts who were violently bearish on both metals in May, and who turned suddenly bullish close to the June price peak, have turned noticeably bearish again, and since these analysts are consistently on the wrong side, th
is confirms the buy signal. As a general rule, ignore technical analysts who talk about trend lines, which are meaningless, and pay attention to those who closely track patterns of higher lows and/or lower highs, which have significant forecasting power. Investors should consider purchasing bars, coins, and collectibles, since the premium for even old gold and silver coins and collectibles in many cases is only a few percent above the melt price, and therefore represents a historically compelling buying opportunity. When gold and silver become trendy, possibly as soon as a year from now, its collectibles are likely to sell at a significantly larger premium to the melt price. Even palladium has become attractive for purchase, and appears to be completing its own double bottom. Only platinum remains generally overvalued and should be avoided at this time.

AGGRESSIVELY SELL SHORT THE U.S. DOLLAR (July 4, 2005): The traders' commitments for the U.S. dollar index showed commercials at a new all-time record net short position, and given the dollar's modest decline since the commitments were tabulated, it is likely that they are at an even greater extreme. The business media has been turning noticeably more bullish toward the greenback, with Business Week's latest issue even giving a list of recommended mutual funds that will benefit from a rising dollar, and other publications following suit. Those analysts who were most bearish on the U.S. dollar when it was bottoming at the end of 2004 are generally those who have turned most bullish a half year later, and it is likely that they will be as wrong this time as they were last time. As mentioned previously on this web site, I am personally buying shares of BEGBX, the American Century International Bond Fund, which had a net asset value of 13.55 at Friday's July 1, 2005 close. This fund is recommended for conservativ
e investors who prefer less volatility than is experienced by gold funds such as BGEIX, the American Century Global Gold Fund, in which I also have my own money invested, and which is mentioned elsewhere on this web site (see below). The traders' commitments for many currencies are also at unusually bullish extremes, with the notable exception of the Australian dollar; the Swiss franc appears to be especially attractive for investment at this time, should readers have access to Swiss time deposits.

THE NASDAQ WILL CONTINUE AND SOON ACCELERATE ITS DECLINE (July 4, 2005): The Nasdaq has been continuing its bearish 2005 chart pattern, with the Philadelphia Semiconductor Index (SOX), the most bearish sector group since January 2004, continuing to show a clear pattern of lower highs, and making a critical downside breakout in the past week. This should lead to sharply lower prices for U.S. technology shares between now and the next Federal Reserve policy meeting on August 9, 2005. The Nasdaq should reach 1900 quickly, and will probably break below that important support level, which has held with one exception since November 2003, and fall all the way to just above the August 2004 low of 1750 by the middle of August 2005. Investors who are already short technology shares, and wish to diversify their portfolio, should consider selling short companies which have unduly benefited from the housing bubble, and for which a decline to their levels of the summer of 2004 would imply a pullback of 40% or more.

SY JACOBS EXPLAINS THE HOUSING BUBBLE BEST (July 4, 2005): I was going to make a remark about the absurd U.S. housing bubble, but in this week's Barron's, there is an interview with Sy Jacobs, a respected Manhattan money manager. The article is accompanied by a photo of one of my favorite small streets in New York City, located one block north of Washington Square Park in Manhattan. I will therefore simply quote directly from Mr. Jacobs:"In a letter to my investors recently, I looked back over the last 10 years and talked a bit about what I expect the next 10 years to be like. In addition to rates being a headwind, I said I suspect, timing aside, the bursting of the housing bubble to be a dominant theme for investing in financial stocks in the next decade. There will be major implications for financial stocks. We have gone through largely 10 years where the credit quality of lenders has been getting better. A lot of that has been driven by rising collateral prices. It's hard to lose when the price of the und
erlying collateral is going up. A change in the value of the collateral is going to be a second headwind in the face of financial stocks. Also, competition for making loans has increased because everybody feels good about making mortgage loans and real estate loans and it's human nature to loosen credit standards to maintain or grow market share, and that has been going on. During the next 10 years, we are going to be dealing with worsening, perhaps dramatically worsening, credit at some point. From a sociological point of view, housing feels so much like 1999 and the Nasdaq. Somebody showed me a Website today called condoflip.com that teaches how to flip condos. It made me feel like the end is near. There is a lot of speculation coming front and center, and it reminds me of a proverb,"What the wise man does in the beginning, the fool does in the end." Personally, I just sold my loft and I'm renting a townhouse. So it's clear how I feel. I'm trying to stay out of trouble and looking for situations on the sho
rt side where companies are exposed to housing, and where the market seems to be mistaking their recent growth for long-term growth, and where there's a lack of understanding of the cyclicality of the underlying business. In other words, where investors are mistaking the past for the future." Thank you, Mr. Jacobs. I definitely couldn't have said it better myself.

-->Kaplan trifft oft ziemlich genau ins Schwarze, ein echter Geheimtip, aber wenn ihn zuviele lesen wird das wohl bald vorbei sein.