OUTLOOK

"Betting on a Decline in Gold Stocks"

9/18/2007

We believe the XAU Index, representative of gold stocks, will have at least a 5% correction from its peak level within the next 6 weeks.

Our system is showing extremes in bullish sentiment and overbought conditions in gold stocks.  As contrarians, we believe this is a good time to bet against the crowd.  Based on our bearish outlook, we have initiated short positions to profit from a decline in gold stocks.

Mark Yuan, CFA