Chart constructed using Advanced GET End-of-Day

Given the relative appearance of the physical metal chart versus a slightly more "broken" appearance by many gold equity charts (As an aside, many burnt fingers now exist from having chased the likes of obvious big-cap gold names -- particularly Newmont and American Barrick -- as high as those stocks went in late May/early June), we would not be surprised to see the actual cash metal outperform many gold equity plays during the latest anticipated gold price advance. Notwithstanding that view, we believe Ashanti Gold (ASL - $5.35) might be one stock in particular with a good shot to reach new highs in the not-to-distant future. We see resistance on ASL between $6.85-$7.35.

Chart constructed using Advanced GET End-of-Day

Now please do not confuse commodity markets. Sandspring.com once again turning bullish gold does not necessarily make us want to throw in the towel on our previously espoused bearish crude oil (dead wrong to date) and copper (dead right to date) views. If Iraq is attacked, and its crude supply chain disrupted, Iraq's one million barrel per day supply will easily (and happily) be supplanted by other OPEC producers who have ready capacity to produce up to 5 million more barrels per day. In addition, just look at the chart below of the U.S. strategic petroleum reserves. The friend of mine who sent me this chart referred to it as the "Clinton Dip and the Bush Refill." There is simply tons of petroleum out there just ready to be released to the market. Crude prices may still spike up to $30.75 or so in the short-term, but is such a price consistent with gasoline prices in the U.S. being at 2-year lows? We think with time a gap that exists in the daily crude chart down near $22 will be filled.

Chart constructed using Advanced GET End-of-Day

If Iraq hostilities mount, gold, not oil, might be the market in tighter technical supply -- particularly if producers feel compelled to close short forward hedges. Rumor has it that a wave of such activity already started to transpire this past week. We are not GATA conspiracy theorists, but producers do occasionally go through waves of unwinding forward hedges, and this buying can be quite important to market price behavior.

A November 7, 2002 high in Gold? We'll see with time of course, but that certainly feels increasingly right given the gold price action over the past two trading days.

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Sand Spring Advisors provides information and analysis from sources and using methods it believes reliable, but cannot accept responsibility for any trading losses that may be incurred as a result of our analysis. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities, and should always trade at a position size level well within their financial condition. Principals of Sand Spring Advisors may carry positions in securities or futures discussed, but as a matter of policy will always so disclose this if it is the case, and will specifically not trade in any described security or futures for a period 5 business days prior to or subsequent to a commentary being released on a given security or futures.