THE COMPASS

[Picassa]

Schafer: No one has mentioned that four-letter word yet: gold.

Hickey: I've had more than 50% of my assets in gold for the past seven years. Institutional ownership of gold is ridiculously low. It is less than 1%.

Zulauf: At its 1980 peak of $850 an ounce, gold represented 3% of the market capitalization of global equities, bonds and money-market assets. Today it is 0.6%. The price has a long way to go.

Hickey: We have seen tremendous speculation and exuberance in the stock market, as evidenced by Investors Intelligence and other sentiment indicators. Not so in gold; the Hulbert Gold Newsletter Sentiment Index is down. But the gold-stock rally has entered its speculative phase. The GDXJ [ Market Vectors Junior Gold Miners exchange-traded fund] was up twice as much as the GDX [ Market Vectors Gold Miners] last year. Mining stocks are undervalued.

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