[Rick has been under the weather with a possible case of food poisoning. Filling in for him today is Chuck Cohen, a financial consultant whose work will be familiar to many of you. The following appeared at LeMetropole.com over the weekend. Chuck thinks that as long as the news media continue to stumble around in the dark in their coverage of the gold world, we should remain confident about accumulating more bullion and precious metal shares for the long haul. RA]

It took a mix of $1000 gold, the media’s reaction to it, and a very fallow day to compose this piece. As serious as the news is these days, it is still difficult not to see the absurdity in what is unfolding. Now that gold has finally pierced $1000, I had expected to find repentance and mea culpas by a news media that has persistently resisted and even mocked the gold bugs for nearly a decade. But if the news over the weekend is an indication, gold might need to hit $5000 before the media finally head to the confession booth.  But that’s great news, as far as I’m concerned. As we know by now, the less company we keep, especially from the mainstream, the better.

Consider the following, penetrating insights into gold that I found over the weekend. (And if the media are puzzled by why they have lost almost all credibility and readership, according to the latest Pew Research survey, then they should read these articles.

 For This We Buy Barron’s?

This weekend’s featured article in Barron’s, by a Ms. Jacqueline Doherty (although I am suspicious that this might be merely a nom de plume of Jon Nadler, the Scarlet Pimpernel of the gold world), who concludes prophetically that “after a likely pullback of 10-20%, or $100 or $200 in the price, it is likely that gold will rise some more… Consequently, investors should consider allocating 5% to 10% of their portfolios to gold, buying advantageously when prices dip.”  Wow! That’s why they charge $5 for a thin issue, and why Barron’s deemed this information so. This is not hemming-and-hawing advice, but an unhedged, clarion call to action. It is likely to go down, but it is also likely to go up. Now that’s deep!

With the clarity this brings, I wonder, what should I do now. Should I scale down, starting at about $825 — or really try to finesse it, at say, $805. Maybe I can locate Ms. Doherty — or Mr. Nadler, if that’s who it is — and get a precise price for my bid. But I think Jon is still looking for $600, not $800, so there must be a real Ms. Doherty. Gold is so confusing. No wonder, Americans prefer to sell it, or to buy an overpriced house or Citigroup shares with their clunker money.

But if gold then rallies back to $1000, producing a 25% profit, wouldn’t it be grossly overbought by then and therefore likely to slide back to $800? At that point, might we not be looking at a pattern, like Sisyphus eternally pushing the rock uphill? At that point, Barron’s is going to come up with another crackerjack insight into the mysterious yellow metal. I’ll alert you, not if, but when, her or his predictions come to pass.

IMF in Mass Selloff

From Cortlan Bennett, Business Editor, Perth Now, we get word on Kitco of an impending large IMF sale of gold: “The International Monetary Fund will sell 403.3 tonnes of its gold reserves, worth an estimated $A15 billion, to provide loans to poor countries and shore up its finances. While the fund’s executive board said it decided on Friday to sell its stocks in a way that would not disrupt commodity markets, gold prices are expected to be hit hard.  Perth-based Stock Analysis author Peter Strachan agreed. ‘When it was announced, (the gold price) went down about US $5,’ he said. `I think it will be under pressure and the Chinese will probably be buying it on the back foot. We might see it go down $US20-$30, but I think ultimately the Chinese will be looking at this as a great opportunity to get a big chunk of it.’ ”

 My Reaction

First, there was that headline: “IMF In Mass Selloff.” Gripping, right?  I think he meant mass ‘selling,’ not ‘selloff.’ Probably, his anti-gold subconscious was programmed to think ‘selloff, ‘ not selling, since he has used the word so often when covering gold. And a selloff of $20-30? One man’s plunge is another man’s manipulation, and yet another’s opportunity. That comes to 2% compared to a rise of 400% since 2001. Am I too biased or blind to think that this is a very small reaction given the scheme of things? And is $14 billion a tiny fraction of China’s foreign reserves? Also, the IMF has only been threatening this sale since Spain invaded the New World, but such a shocking announcement coming conveniently after a Friday close might cause me a restless and sleepless weekend, as I wonder if gold might really collapse back to $980. Maybe I’ll lighten up on Monday, or even in Asia before the Comex opens, and then wait anxiously to see how far down gold will plunge. It might even plummet back to, gulp, $970, and then from there who knows it might go straight down to $400, and Mr. Prechter would finally be vindicated. Alas, far too many variables for my mind to sort out. Does anyone have Jon’s or Leonard Kaplan’s email address to get my hands held?

 Reflecting on a slew of nervous-Nelly articles concerning gold over the weekend, Chuck finds reason to be amused by it all:

I am going to take immediate action and plunder my wife’s jewelry box and her dresser drawers, grab every single gold-related piece and ship it all off to Money-for-Gold, which will generously pay me 50% of their value based on gold content. That seems like a fair price, since the company needs to make a profit. And, who knows? Gold might be under $1000 by the close tomorrow, and my 46″ HDTV is beginning to look mighty puny against the new 72″ models. And they are on sale for under $4000 — just about what I would get at 50% of the value of her jewelry, At least I’ll wind up with something of real value.

 Bizarre Market

Don’t these articles continue to reinforce the bizarre and absurd idiosyncrasies of this gold market? No wonder most of us are paranoid and continually on edge even as gold has climbed 400% — climbed in each and every year of the 21^st Century. Just as a quick reprise, here is what we have had to battle against over the last eight years or more:  1) the constant threat of central bank dumping; 2) the constant threat of IMF selling; 3) the fear of the commercials capping the price; 4) the historic liquidity squeeze last year; 5) the constant fear of a dollar rally; 6) a slowdown in world jewelry sales; 7) the huge, scrap jewelry sales, and 7) daily manipulation by the world monetary authorities and others with a vested interest in discouraging enthusiasm for bullion. Finally, we have the fifth columnists that masquerade as gold ‘advisors’ but mainly try to scare us into thinking a top is at hand — and you had better get out before you lose everything. I call that subscription by fear.

But take a moment to think about this: Have all of these threats made a difference to the trend? And, is it logical that it will make any difference, since the fundamentals have only gotten more and more favorable?

Same Old Game

What am I getting at? Just this: Here we are on September 20, 2009, the price of gold is $1000, the world economies have just rammed trillions of dollars more of worthless paper into a failing world economy, and yet the system is more rotten and corrupt than ever. This is the scenario that most true gold people have anticipated for a very long time, and now it is upon us. The odds that this drama is going to end or reverse are so remote that the Las Vegas oddsmakers would probably not book a bet on it happening. We are lifting off in a historic parabolic pattern (look again at the charts)  Questions concerning where it will end, and how high it will go, are pure speculation. But it won’t be soon, and it won’t be anywhere near the current price.

Just be sure you understand the value and the future of gold. We know we’re in a lonely minority, but we don’t need a validation by a mainstream who have never or will never understand gold or the company of supposedly renowned people. As I always point out, it is like faith in Jesus — you either see him or you don’t.

When to Sell

You don’t need Bob Prechter, Warren Buffett, Alan Greenspan, Jon Nadler, Leonard Kaplan, Jim Cramer, Larry King, Abbe Joseph Cohen, Larry Kudlow, Oprah, Barack, Paula Abdul, Jimmy Carter, Bono, Tom Cruise, or, finally, a front-page feature in the New York Times to assure you that they are in the gold camp.  When that happens it will be time to sell and retire to a safe and hidden location.

Please relax. The $1000 level is just another weigh station on a very long journey. There are going to be many dramatic episodes on the way, but the ultimate destination is still far, far away.  

To contact Chuck via e-mail, click here.  And if you’d like to have Rick’s Picks commentary delivered free each day to your e-mail box, click here.)