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Strategies & Market Trends : Precious Metals mutual funds (gold, silver, PGMs) -- Ignore unavailable to you. Want to Upgrade?

To: Larry S. who wrote (949)12/26/2005 5:26:11 PM
From: Larry S.  Read Replies (1) | Respond to of 972
Dan & Wade et al,

It benn a month since I posted the Barron's GMI bit but I have the data, so I will post the missing bits below. As indicated, the POG has had a wild ride the past few weeks but is back about where is was a month ago. If Barron's is the contrary indicator it has been in the past, it should pull back further as this Christmas week edition contains a very bullish story by one of the Barron's staff. It includes the following quotes;

""Most people on Wall Street have a very strong opinion on gold, but very few people know what they're talking about," says Trey Reik, who runs Clapboard Hill Partners, a long/short equity fund that focuses on mining shares. "The fact is, you don't know [the reasons for the spike] until after the peak and you see how it unwinds."

Certainly, eager speculators have played a role in the big run-up. "Investors have been scrambling to find anything they can bid up in price," says Peter Perkins, a global investment strategist at BCA Research.

The level of speculation has led some, including Reik, to predict a price pullback, perhaps to $480 an ounce, before the longer-term bull market plays out. But James Turk, founder of, a well-regarded Internet site for buying and selling gold, expects prices to top $850 an ounce next year. He's worth listening to: In the fall of 2004, Turk correctly forecast that gold would break $500 in 2005.

Turk sees the move above $500 as "an international buy signal" that confirms for investors that "this move is for real." He notes that gold has been rising against all of the major currencies, something that hasn't occurred since the 1970s, the start of the last major bull market in gold. He points out that in current dollars, gold's all-time high of $850 an ounce, reached in 1980, would be $2,200."

Lease rates continue at very low levels and the rates for different lease durations are almost the same. As I indicated a month ago, I don't know what it means but it is different condition than I've noticed in the past 10 years.

The GMI/POG ratio:

On 12/01, the Barron's GMI was 848.19 up from the prior week's 833.31. With the POG also up(breaking 500) at 502.55(12/02), the ratio was down slightly at 1.69.

On 12/08, the Barron's GMI was 876.16 up from the prior week's 848.19. With the POG up significantly at 525.50(12/09), the ratio was down at 1.47.

On 12/15, the Barron's GMI was 845.58 down from the prior week's 876.16. With the POG down significantly at 507.50(12/16), the ratio was up at 1.67.

On 12/22, the Barron's GMI was 863,74 up from the prior week's 845.58. With the POG down at 505.00 (12/23), the ratio was up at 1.71.

As I have observed in my recent posts, 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; it is clear that the ratio is on the high side of the mean.

The ratio a year ago was 1.50; the GMI was nealy 200 lower.