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Strategies & Market Trends : Precious Metals mutual funds (gold, silver, PGMs)

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To: Larry S. who wrote (946)11/20/2005 9:04:55 AM
From: Larry S.  Read Replies (1) of 972
 
Dan & Wade et al,

I see that I have missed two weeks so I will post the past two week's as well as this week's GMI ratio bit today. However, it is most interesting that with gold at a several-year high, this week's Barron's carried an interview with JOHN HATHAWAY the Tocqueville Gold Fund manager. Of course, he is very bullish long term and sees major interest coming into the market when the price breaks $500.00/oz. He sees this happening during the next few months. Abelson also had some bullish words concerning gold in his "Up and Down Wall Street" column this week. So that they covered both sides of the debate, the Economic Beat Column this week was written by Carl B. Weinberg, the economist at High Frequency Electronics and he is very bullish on the dollar and obviously not bullish on gold. The Commodities Corner is devoted to Copper and discusses the Chinese Trader that is in trouble with a large short position. The general thrust of the story is bullish - supplies are low and demand continues to hold (it won't drop unless we have a global recession, in which case the dollar is likely to fall hard. In any event, when Barron's starts publishing bullish stories on gold, it is time to look for a pull back.

The GMI/POG ratio:

On 11/03, the Barron's GMI was 773.23 up significantly from the previous week's 745.40. With the POG down but only slightly at 460.50 (11/04), the ratio was up at 1.68.

On 11/10, the Barron's GMI was 779.80 up from the prior week's 773.23. With the POG also up at 466.75 (11/11), the ratio was down slightly at 1.67.

On 11/17, the Barron's GMI was 833.72 up significantly from the prior week's 779.80. With the POG also up at 485.85 (11/18), the ratio was up at 1.72.

I observed in my a previous post that I can't access the website with the data on the meaning of the ratio. It may have been shut down. If we can't access it, it is not clear to me that continuing to post the ratio is worth while. I can't seem to find the time to put the data into a spread sheet; so that we could build our own model. In any event, I will continue to post the ratio bit for a few more weeks. However, I recall (I think) that a higher ratio must be achieved before the probability of a major decline becomes substantial.

The ratio a year ago was 1.58, almost as high as today.

Larry
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