SUMMER RALLY IN GOLD, NOT STOCKS! - Craig R. Smith

Jun 19, 2003


Yes, there's a "summer rally" on the horizon, but most likely, it won't be in stocks, according to a growing number of senior market analysts.

Instead, it is gold-related investments that are poised for a healthy rally in the second half of '03. WHY? Here are a few quotes from some top experts...

* * *

"Summer is at hand but don't count on the proverbial 'summer rally' in the stock market. That's why there is an old stock market saying, 'Sell in May and go away.'

-JOHN DORFMAN, 'The Summer Rally Myth', Bloomberg 6-19-03

* * *

"Gold's price is on the verge of staging a powerful summer rally in all currencies, boosting bullion producers and their more risky counterparts, exploration companies."

-THOM CALANDRA, CBSMarketWatch, 6/19/03

* * *

"We are at the early stages of another bull market for gold."

-JEAN-MARIE EVEILLARD, First Eagle Gold Fund 6-2-03

* * *

"Gold is the 'best kept secret' in investing. Gold's five-year outperformance vs. the S&P 500 is just the beginning of a long-term secular upswing that could last as long as 20 years, judging by past cycles. Gold can go to $1000 per ounce before its current bull move ends."

-JOHN HATHAWAY, DeTocqueville Fund, 6-17-03

* * *

"I look for gold to pass the $400 mark very soon. And then? Toward $500."

-HARRY SCHULTZ, "The only bull market is the gold market", CBS

* * *

"The question -- should I mess around with this bear market in stocks -- or should I take a large position in gold and gold shares and bank on the bull market in gold being the right way to go? I decided that the potential big money was with the gold bull market rather than trying to 'beat the bear.' And that's where I am now."

-RICHARD RUSSELL,Dowtheoryletters.com, 5/21/03

* * *

I REST MY CASE! OK, now let's keep our perspective here. True, stocks have been in a post-war rally (March-June) but did you know that over the past few years both gold bullion and high quality gold coins have outperformed stocks -- and most other assets? It's true!


Let's start by comparing market performance since Jan. 2001. You remember, the new bull market in stocks was "right around the corner," according to all the media pundits. Gold was $270 per ounce and the Dow was sitting at 11,000.





As the charts show, this period has been a very bumpy ride in stocks, but, if you had taken our advice and put 10-20% of your portfolio into gold and/or rare gold coins, you would have had a nice cushion against the ongoing BEAR market in stocks by participating in the emerging BULL market in gold. Notice high quality gold coins are up between 25% and 46%!


JAN. 2001 - JUNE 2003

$20 LIB (MS65) - UP 46%
$20 ST. (MS65) - UP 25%
GOLD (bullion) - UP 35%
DJIA - DOWN 19%


Water under the bridge, you say? OK, let's say you ignored our advice until last summer, June 2002. You remember, gold was $320 per ounce and the Dow was sitting at 10,000... and the economy was supposed to begin “recovering,” right?





Again, as the charts show, it has been yet another bumpy year for stocks, until March 2003, when the post-war rally began. But even considering the stock market's 25% increase in the second quarter, most stock investors are still not yet even with June 2002 price levels. Again, IF you had taken a portion of your money off the table and put it into gold and/or rare gold coins, you could be up between 11% and 19%!


JUNE 2002 - JUNE 2003

$20 LIB (MS65) - UP 19%
$20 ST. (MS65) - UP 13%
GOLD (bullion) - UP 11%
DJIA - DOWN 6%


CONCLUSION

Everyone from Jim Cramer of TheStreet.com to Tom Obrien of The Gold Report -- regardless of whether they're stock bulls or bears -- are presently begging their audiences to take some of the profit from a stock market rally off of the table and move it into either cash or gold. But, will you listen to them (or us) NOW and TAKE ACTION? That is the $64,000 question!

I hope so. If so, one year from now ... two years from now ... five years from now, you will have kept your peace of mind. If you diversify a portion of your money into gold you will not have to worry about whether the post-war stock market rally of 2003 was for real -- or just another fake out -- another sucker's rally (like we witnessed back in October, 2002).

As I have said many times, "Bull or bear? Who cares!"... IF you have hedged yourself with tangibles, you win either way!

P.S. OK, let's say I'm wrong and stocks ARE in a new bull market. What is your downside risk of diversification into gold? Very small, compared to the upside potential of $800-$1,000 gold! Call Swiss America today to stake your claim in the new gold rush at 1-800-289-2646...Still not convinced? Read my 2003 Alert: Gold Breakout!


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