SPECIAL GOLD ALERT
By: John L. Person, CTA 10/10/03
Trading Futures and Options involves significant risk of loss.

The Dollar Index established another new yearly low today against most of the major foreign currencies. Equities look stretched from a valuation standpoint to what was expected last quarter in comparison to where the market is currently trading.In addition, the economy is still questionable as to the ability to remain on track for continued growth.

Platinum certainly out performed the entire metals group as it is reaching to new contract highs at 729.50 in the February Futures contract. Even Silver has demonstrated a nice recovery from the lows this week, as it too was a victim of a profit-taking raid last week. Bargain hunters, or better put value investors looking for opportunity, sense that this correction that Gold and silver experienced was a good spot to add positions.

I am still bullish on Gold and expect a move between 400 and 420 by year's end. As for silver I expect a return to the 5.25 level. Two of the most important Fundamental factors that strengthen my belief that this is possible is I anticipate another 7% decline in the Dollar and I also expect a pick up in inflationary pressure. To validate that statement start looking at some raw commodity prices.

Soybeans are making multi year highs, Cattle Prices are at all time historic highs, Cotton is reaching for multi year highs and energy prices are continuously testing the upper price bands.
Basic commodity prices are rising. Investors may see this as the beginning of inflationary price pressures. If so then the Fed would have succeeded in combating deflation.
The chart below shows a technical picture where the potential third wave for a market advance is targeted at 423 based on Fibonacci calculations.