Welcome to GCRU #52 (Happy Birthday to GCRU, age 1) on Wed, Feb 26, 2003. It was a Wed-to-Wed wk of generally rising bullion & sliding gold shares. Bullion rose from a wk ago Wed low of 341 to this wk Tues high of 360. But U wouldn’t know it to look at any of the gold share indices, including our own Schultz Gold Index (though it held far better than HUI & XAU). What happened? Two groups attacked the shares: 1. Certain hedge funds are long bullion & want to hold that position (their core) elected, again, to short the shares as a hedge, not a quaint action for a hedge fund! Some saw gold at 380 was 15% over its 200 day mvg avg, highest premium in 15yrs, so prudent to hedge. If they’re lucky, they’ll profit on both positions - if they cover before the turn appears obvious. 2. The Gold Cartel put their boot in, shorting shares, hoping to create a negative climate, so bullion would also fall. It didn’t work, until yesterday, Tues, when bullion finally caved in, fell back from its 360 Tues high. In all this to&fro action, the gold indices formed small toppy chart patterns, & all 3 fell below a kind of neckline, targeting a lower price. Not deep in price but deep in nervous-making for weak holders. ···The fascinating querk here is the difference in behavior of individual gold stks. Eg, Royal Gold slumped badly on disappointing earnings. But AgnicoEagle rose from a bullish wedge pattern. Some, like Eldorado, Glamis, Newmont, Viceroy & Iamgold were up fractionally. Others, like Goldcorp, rose, then lost the gain. HighRiver rose to near prior high. Meridian (which I deleted from GCRU) collapsed. Ditto Novagold. RioNarcea rose nicely. TanRange was the star performer, raced to new peak. ··What to do? Core position: stay put. Trading positions: if fully invested, hold still but reduce positions if bit over-invested &/or uncomfortable. If under-invested: place buy orders at possible downside targets for these pesky toppy patterns. See guidelines inside. ··But always feel free to upgrade parts of your core holdings. If U just hang on to XX because it’s core, regardless of its relative performance, then your end results will clearly suffer. Eg, sell Meridian & buy TanRange with the proceeds. ··New GCRU members may hold derivative hedged stks. If so, switch out quickly, eg, Barrick & Placer. ··How big should your core position be? Rule of thumb: 2/3rds of total. But U may prefer only 50% core or 40%. Trade the rest. But upgrade core. ··I’m often asked for a list of stocks in the Schultz Gold Index. Sorry, but we feel it would be a mistake to do so as it would let the hedge funds & gold cartel know which stocks to zero in on with their short selling, in order to undermine the validity of SGI. They know SGI contains the prime gold stks. ··Final thought: treat gold shares as individuals, not a group who all move together. Some are at year highs, some at year lows. Birthday bye from your alchemist guru, Uncle Harry.