A mere 10 months ago, long-suffering gold bugs were quieter than church mice.

The gold chatboards were deader than delisted dot-coms. An alert Edge reader took us to task for an “irresponsible” column about that sleeping giant named Bullion, 20 years in a bear market, looking like it was about to awaken with a vengeance.

Since then, the gold price has surged $55 US per ounce and, suddenly, gold bugs are cheekier than Tie Domi.

Too cheeky?

Perhaps.

Although it may be unwise to challenge the wisdom of seasoned Canadian gold gurus such as John Embry, who is calling for a prolonged bull market in which the price of gold could hit $500 US (recently at $322.50), gold bugs should pay heed to the lessons from the tech crash.

Remember how giddy tech investors, with their blinders and their rose-coloured glasses and their rational exuberance, were squashed by greed during the past two years?

Gold bugs have been taking off their gloves on a chatboard at www.theminingweb.com and hurling their sparkling gold bars at gold bears in response to two columns on that website in which analysts recommended investors sell their gold shares, setting the stage for the next spike up.

One of the views that rankled gold bugs came courtesy of JP Morgan’s London-based technical analyst, Craig Ferguson, who said the gold price was not expected to vault over the $330-$341 range and cited a “potential for a bearish reversal.”

“JP Morgan is the fox guarding the henhouse,” cackled one gold bug.

Another one spat: “The poor sods (gold bears) won’t even be able to afford a beer to cry in soon!”

Yet another mused: “They have their heads stuck down some dirty miner shaft and can’t see the world from there.”

RBC Financial’s Embry, a 40-year veteran of gold forecasting, compares the fundamentals favouring gold to the 1970s when gold began a decade-long charge from $35 to $800.

Embry’s words carry some weight. While most Canadian mutual funds are as red as the faces of the portfolio managers, Embry’s Royal Precious Metals Fund is the hottest fund in North America with an astonishing 114-per-cent gain since Jan. 1.

Top holdings include high flyers Gold Fields (GFI-NYSE), Meridian Gold (MNG-TSX), Iamgold (IMG-TSX), Repadre Capital (RPD-TSX), Newmont (NEM-NYSE), Gold Corp. (G-TSX), Kinross (K-TSX), Glamis Gold (GLG-TSX) and River Gold (RIV-TSX). The top performer, Kinross, is a four-bagger (since Jan. 2) that lost $40 million in the past year.

“If you go back and look at the valuations of gold shares at the beginning of the 1970s, they looked pretty extreme too,” Embry told Mining Web.

“I think the gold share market, in its wisdom, realizes that the gold price is considerably undervalued, in my mind, and is probably on the threshold of a significant move.

Over the next six months, I’m very comfortable with the notion of $350 gold but, if you stretch it out, say 18 to 24 months, I would not be shocked if it reached $500.”

Of the top 20 movers on the TSX since the beginning of the year, 14 are gold stocks, including Nevsun Resources (NSU), up 657 per cent. Many gold plays have overshot the gold price, leading Andy Smith, analyst with London-based Mitsui Global Precious Metals, to liken them to “fat-bottomed girls.”

Gold thrives in an environment of a weakening U.S. dollar, a rattled stock market, economic chaos internationally, Wall Street scandals, war and threats of terrorism.

All these factors have helped gold and gold stocks take flight.

Even the ultraconservative Ross Healy, president of Toronto-based Strategic Analysis, has begun thumping the tub for gold, suggesting a $450 price may be in the cards.

American gold guru Bill Murphy, the one-time Boston Patriots’ receiver, editor of www.LeMetropoleCafe.com and chairman of GATA (Gold Anti-Trust Action Committee), is forecasting a $1,000 gold price.

Embry, in a recent report to clients, says he is doubling exposure to silver as silver stocks begin to play catch-up to gold.

Meanwhile, gold bugs have begun to move down the food chain to bid up speculative penny gold plays, causing near comatose 10-centers such as Geomaque Exploration (GEO-TSX) to more than double in a matter of a few days.

Although the valuations for some gold stocks are starting to resemble the dot-coms before the crash, many gold watchers believe the yellow metal may have legs to run as long as it hasn’t caught the fancy of Joe Public.

Once gold becomes the buzzword at cocktail parties and magazine stands scream out headlines about Gold Fever, gold bugs may be wise to buzz their broker.

* STREET TALK: How much stock does a top fund manager such as Wayne Deans of Deans Knight Asset Management put in analyst recommendations?

“None,” says Deans. “And that’s not to say all analysts are bad, but there are very few we work closely with and trust. Most are terribly conflicted and in the bull market we just came through there was a lot of pressure on analysts to put out recommendations to feed their investment banking business. That’s obviously why Merrill Lynch just paid a $100-million US (settlement).”

But Deans doesn’t buy the notion that many investors were oblivious to the conflicts of interest behind most analyst recommendations.

“You have to be an idiot not to know about (the conflicts of interest),” says the Vancouver-based money manager. “It was their own damned fault. It’s called greed. People get greedy and think they can make a quick buck and get out before the house of cards comes collapsing down.”

* SAGE ADVICE: “Success is a long-term proposition and most of your time should be spent patiently hunting for the fattest prizes, not frenetically chasing after every mangy stray.”

– Douglas Casey, author of Crisis Investing.



HOT ALBERTA STOCK: Echo Bay Mines

ECO-TSX $1.67 Up 44 cents (+35.8%) on 18,277,600 (for week ending May 24). Echo Bay's mines are in Nevada, a gold brick's throw from Vegas. It figures. Ka-Ching! Ka-Ching! Investors in the Edmonton-based gold miner have struck a double since the start of the year but now, with the gold market on fire, some serious money is being funnelled into Echo. In a four-day week, more than 18 million shares traded hands, including almost six million on Friday.



COLD ALBERTA STOCK: Biomira

BRA-TSX $4.50 Down $1.00 (-18.2%) on 341,400 shares (for week ending May 24). At its annual meeting, Biomira, the Edmonton developer of cancer treatments, basically said what it said it was going to say. But last week's hot stock became this week's cold cuts, precipitating a plea for patience on a chatboard that put the painfully slow biotech industry into perspective. "This type of research surely takes time," explained the chatboarder. "Something like creating a baby. There is no way yer gonna speed up this natural process by having nine fellas working on it for only one month."