November 21, 2017 
 Tuesday 
 
 

Forum
Topic:
Gold Enters Major Bull Market

       

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 By bluejay

02/23/2007  1:23PM

Gold $682.90
Silver $14.49
Gold/Silver Ratio 47.13

Attempting to reason out the relationship of gold stocks to the price of gold can be frustrating. The constant set of changing variables for each gold producing, development or exploration company can be a real challenge for investors.

What investors and prospective investors don't need is the meddling in the share prices of these companies by the Dark Empire. The Dark Empire is a secret association of bullion banks acting in the interests of their handlers, the people who control your currency. You know who they are. The bullion banks are usually the Wall Street firms that get to sell all the new Treasury issues for the government. Get the picture, one hand washes the other.

It was mentioned on February 6, 2007 that there was short selling pressure being exerted on gold shares in the 139 to 142 area on the chart of the Philadelphia Gold & Silver Index(XAU). It was suspected at the time it was the work of the anti-gold community, the Dark Empire.

Gold is higher today and the group is back at work selling the shares short again. It's fairly easy to imagine the conversations coming from their clandestine control stations. Their ally in selling the shares is the formidable resistance on the Index in the vicinity of the 150 area which has choked off intermediate term advances for some time. This area has been the bear's killing zone for the past 20 years.

Today, the high on the XAU was 148.11 with a low and last of 145.68. Unless the gold price starts to tank very soon, these unscrupulous operators are destined to have their worst nightmare come true, a violent short squeeze. This squeeze could easily take the Index 20% higher, above and beyond major resistance. This event will be monumental in presenting to gold share owners the best of all worlds for profits in the years ahead.

It would not be surprising for the timing of this foreseen event to take place without any help from gold.

It is important for investors to understand what makes markets tick. It is not always about what you think it is.
 By bluejay

02/19/2007  2:11PM

Gold $670.80
Silver $13.98

Gold appears to have established itself above resistance at the $650 area. This action indicates that gold's resting period is over and we can look forward to intermediate strength.

Today I read a short article concerning GoldCorp selling off some of their smaller gold operations in Australia and in South America. It looks likes GoldCorp may be getting ready to do a deal soon for additional superior reserves.

In an article today by Grant Smith out of London for Bloomberg he states, "Gold producers are rushing to boost supply because mines are being depleted at a faster rate than discovery of reserves."

I remember reading somewhere that in the past 10 years there have not been any new major deposits of gold discovered. I believe the category for a deposit to be classified as a major discovery that it has to be of at least three millions ounces.

According to Dr. Chaize from France there are only 77,000 tons of gold left to be mined in the world today. If it took 103 years from 1900 to 2003 to mine 121,546 tons of gold, how many more years of gold mining remain with only 77,000 tons left?

Another way to put it is to ask the question, what percentage of gold has been mined over earth's history and what percentage remains? One certain statement can be made; the great majority of earth's gold has already been removed from the ground. Do you have yours?

In the future a person's wealth will be judged by the amount of ounces of gold that each owns. Our country has a lot of catching up to do with the general population of India where this is the case.

As China's populace continues the trend of becoming richer, based on international standards, you can bet they'll be buying their ounces too.

In the future, if you don't have some of your wealth in gold coins or bullion or a gold company or two your goose will be cooked when the real truth about fiat currencies is understood by all.
 By bluejay

02/15/2007  5:01PM

Gold $668.40
Silver $13.92

Rae

The first section is from Ferdinand Lips's book, "Gold Wars."

There can be no discussion of gold without also discussing some historic facts about silver, the first metallic monetary standard in ancient times.

While gold was also known, it was mostly concentrated in royal or religious temples and treasuries and rarely entered trade. The value attributed to silver in relation to gold was not measured according to a worldly but to a cosmetic yardstick. The ancients had an explanation for this.

As the moon travels 13.3 times faster through the zodiac than the sun, it was thought that gold was 13.3 times more precious than silver. Man was aware that in money there also ruled a divine order. The gold treasures of Egypt were known for their relationship with the sun. The silver amulets and temple pictures of Ephesus were thought to be related to certain influences of the moon.

Some men believed that gold and silver were ordained, not by elected governments, but by millennia of human experience under divine guidance, and that they are the true monetary metals that have been handed down to us from Biblical times.

In Egypt, the symbol for gold and silver were the same, and gold was considered to be the metal of the gods. In antiquity, gold and silver were stored in shrines and temples, but as they entered circulation, they facilitated trade forever, and the barter economy was a thing of the past.

The Gold/Silver Ratio

One of the most fascinating questions of monetary history, and also one of the most mysterious, is the economic interpretation of the gold/silver ratio and its changes. The ratio was as low as 10 in antiquity. By the beginning of the Modern Age, it crept up to 14. Governments tried to stabilize it at 15 in the eighteen century, but without success. In the nineteeth century the ratio was completely destabilized as it raced towards 60, only to come down to 16 by the end of World War I.

In the post-war years it rose again and hit 100 during the Great Depression in the early 1930's, when silver was selling for 25 cents an ounce. From this all-time high, the ratio started its long descent "pari passu" with the deliberate debasement of world currencies to reach a low of 16 in 1980. From there it began climbing again. At the time of this writing(2001) the Au/Ag ratio is 61.

For thousands of years, the ratio fluctuated between 10 and 15. There was only one exception. During early Egyptian history the ratio was as low as 2.5, but there was a good reason for that: There was a shortage of silver, which came mainly from Greece.

During the following transition period from intrinsic value to non-intrinsic value coinage, the Treasury Department vowed to maintain the $1.29 ceiling on silver by continuing to supply the market from governemnt stocks. The Treasury boosted that it could hold the line on the price of silver until 1980 if necessary. But, speculators
and investors alike rushed to exchange their depreciating Federal Reserve notes for silver bullion in such quantities at the bargain price of $1.29 that direct Treasury sales had to be suspended by the summer of 1967. The price of silver immediately soared above $2 per ounce.

The current Gold/Silver Ratio is 48.02 today according to kitco.com. As gold continues higher in the years ahead there will be more interest in silver and the ratio will reflect this by coming down.

When gold hits $1000 in U.S. dollars expect silver's ratio to gold's to be much lower.

A ratio of 40 would make silver worth $25.

A ratio of 35 would make silver worth $28.57.

An unchanged ratio would make silver worth $20.82.

The following was written by Dr. Thomas Chaize on October 17, 2004 and accessed from dani2989.com.

The Gold/Silver Ratio was constant at 15 for two hundred years, from 1680 to 1870. At the beginning of the sixteenth century the ratio was 10.

Current estimates from this source state that there are 77,000 ton of gold left to be mined and 420,000 tons of silver left.

The ratio of the available reserves is 5.45, this means that the gold still left in the ground is 5.45 times rarer than silver.

In 2002 the world production of silver was 20,000 tons compared to gold's 2,550 tons.
The ratio of production in 2002 is 7.84, this means that the silver is produced 7.84 times more than gold.

Production figures of gold and silver prior to 1900 are difficult to verify.

Silver production 1900-2003: 929,312 tons.

Gold production 1900-2003 121,546 tons.

The gold to silver ratio production from 1900-2003 is 7.64. This figure is very close to the 200 year production ratio.

In 2004 it was estimated that the (average)production costs for silver were $5 an ounce and gold's were $300 an ounce.

The ratio between the production costs of silver and gold is 60.

In conclusion the report states that the price of silver is determined thus largely by its production cost and not by its rarity. The ratio of 60 between gold and silver will fall with the appearance of peak production. Following this event the silver ratio will go to 7.

It is difficult to know at which moment the Gold/Silver Ratio fall will take place, but it is easy to guess that it will pull a vague unprecedented bull on the silver sector, this wave, such as a Tsunami, will take silver to unthinkable heights.

Dr. Chaize's article was translated by Paul Lilliott along with minor adjustments of my own.
 By bluejay

02/14/2007  2:27PM

Gold $668.40

According to the Money and Markets' publication the old high in gold of $875 in 1980 adjusted for inflation is now a high of $2,100.

If we continue to think of gold in constant dollars which we naturally do, then gold is off 23.6% from its old high.

Considering the impact of inflation, gold is really off 68.17% from its adjusted high of $2,100 an ounce.

Gold, aside from the other precious metals, is one of the best buys on the planet.
 By Rae Bell

02/12/2007  8:59AM

Thanks for the interesting article Bluejay.

An integral part of the school tours conducted by the museum is a discussion of the 16 to 1 ratio and we always look at the current ratio for comparison.

The raw gold (dore) from the Sixteen to One Mine is 83.75% gold and 15% silver. The remainder is waste. It is interesting to note that all the mines in the Alleghany District run different purities. I believe the Oriental runs 81% with traces of copper but no silver. The placer nuggets found in the streams and rivers tend to be higher in gold content 90% and usually have a percentage of copper. The nuggets vary depending on where they originated.

When traveling in Mexico a couple years ago several public buildings had signs in the bathrooms stating that the water was purified using colloidal(?) silver.
 By bluejay

02/12/2007  2:06AM

Gold $664.90

To some it may come as a surprise but the Alleghany Mining District's gold ore is not 24 karat which is pure gold. I stand to be corrected by David in gold sales but I believe about 17% of the extracted gold ore is made up of other metals with the majority being silver.

Silver seems to have gone off the radar screen with the public. I overheard a conversation between two cashiers in Rite Aid a few weeks back discussing one of them finding an all silver quarter in her change drawer. Actually, it was 90% silver and 10% copper.

The two employees said they check their change frequently and occasionally silver coins turn up. One lady said that she saves them for her son. I couldn't help mentioning to her that that was an excellent idea and she should buy some more and add to his collection.

She said, how much would that cost? I said how much do you think silver sells for an ounce? Her reply shocked me. She said, 25 cents.

The silver quarter story reminded me of something I had learned many years ago. During the turn of the twentieth century a day's labor was worth one silver quarter. The currency not backed by silver or gold has practically lost 100% of its purchasing power since 1900.

The silent and indirect taxation by currency debasement and monetary inflation to the consumer is what keeps the rich richer and the middle class and the less fortunate poorer.

In 1892 one of the finance platforms for the new Populist Party demanded the free and unlimited coinage of silver to gold at the then present legal ratio of 16 to 1. The Sixteen to One Mine took its name from that 1892 ratio.

It's interesting how things change. At that ratio, if it were allowed to continue, would have made the price of silver today $41.55. Friday's price on silver was $13.81 or by exchanging one ounce of gold worth $664.50 you would end up with 48 ounces of silver.

Today there are more uses for silver than ever before. Silver is even entering the medical field in a big way. Silver has anti-viral and anti-bacterial properties. American Biotech Labs sells a patented silver supplement that is recommended by doctors as a natural alternative for immune support. Hospitals are using more and more minor amounts of silver in cleaning agents and in their sheets and patient's gowns. Cells phones, computers and many other electronic devices are just eating up the annual mine production of silver.

Some say that the price of silver has been manipulated to stay low while others argue against this point. There is more silver consumed every year than is mined. It has been this way for many years. Some say that this condition has existed since the early 1970's.

When the silver to gold ratio is in the upper range gold is outperforming silver and when it is in the lower range silver is outperforming gold.

During the last 37 years an ounce of gold could have purchased as little as 22 ounces of silver in early 1980 when gold hit its high and all the way up to 98 ounces of silver for an ounce of gold in 1991.

Since 1982 silver has been forming a bottom on the chart at and around the $5 an ounce level. Last year silver completed its long term bottom by breaking through the psychological $10 an ounce barrier. Remember what happened to the Dow Jones Industrials when it cleared the 1000 level to the upside? Currently, the price of silver is firmly established above $10 at $13.81. The market has reversed to the upside and is now in a bull market.

This 25 year bottom will serve as an important energy source to take silver higher in the years ahead. Maybe, it might catch up to the 16 to 1 ratio or even go lower which means it is out performing gold and is advancing against it.

Some years ago when the Peso in Mexico collapsed the few people that were able to hold Mexican silver coins survived the near destruction of their country's currency.

Today with the declining production of the PEMEX oil fields in Mexico the populace is demanding a return to silver coinage to protect themselves as government revenues from the oil fields decline faster than forecast. Declining government revenues means certain higher interest rates and increased inflation that Mexico's populace knows all about.

The day may come when our neighbor to the south will be back on a silver standard. If that be the case, a much higher floor on silver will result than the $13.81 in today's market as less silver will be exported by Mexico and available to the market.

For many reasons silver will continue higher and should break an important $15 an ounce barrier. The metal most certainly is entitled to flex its muscles with a bull charge following this event.
 By bluejay

02/06/2007  3:14PM

Gold $652.60

This a day that saw gold firm to $659.50, only to be beaten back in a hurry to just below the $651 level.

This type of market activity is the style of the anti-gold market participants. These guys want to make price, they are not much interested in trading for big profits as a normal trader would be. Their main gig is to play with your mind by frightening you in an attempt to get you to sell.

This is a excellent day to be watching them closely and observing what they do. The Philadelphia Gold & Silver Index(XAU) has been laboring for a few days now. It is suspected that there is a fair amount of shorting in the gold stocks by them over the past few days. The key area for putting pressue on the Index is the 139 to 142 zone, which they are doing.

If this area is surmounted then the gold shares would have a nice run and our little friends will get their fingers burnt. If not and they have their way, the Index could drop to the 130.00 level or so.

All these contrary moves by the group will be short lived as it is most difficult to fight with a bull market. In a bull market you buy weakness not sell strength, that's a fool's game. When the bull market in gold and gold shares is ready to resume following their current resting periods these people are going to be toast again.

The XAU has been in a consolidation area for the past 12 months. The last three major pushes in the Index started once a minimum resting period of 12 months had been met. The average appreciation on those three advances was a minimum of 100% each.

The current shorting of gold shares and messing with the paper gold market appears to be just another act of desperation from a power base that is swimming in a pool of fiat currencies. In the end, the miscreants are in store for the shock of their lives.
 By bluejay

02/02/2007  10:23PM

Gold $645.70

Two great articles to check out.

"A Massive Transfer of Wealth"
321gold.com/editorials/vaneeden/vaneeden012107.html

"The Gold Price-Fixing Conspiracy"
321gold.com/editorials/casey/casey013007.html
 By bluejay

02/01/2007  3:48PM

Gold $656.80

In the comments that were submitted last night some basics in regards to the Philadelphia Gold & Silver Index(XAU) were omitted.

An excellent chart of the XAU can be viewed by going to the website http://www.bigcharts.com. The last sale on the XAU today is 141.09.

When you get there enter the symbol XAU and select basic chart. Later you can select any time period you would like, 1 day to ALL DATA from the box in front of basic chart. Usually, a good enough picture of what you want to see can be found on a two year chart.

I enjoy working with charts and have been doing so for many years. As Sir Isaac Newton once said, "Truth is ever found in the simplicity, and not in the multiplicity and confusion of things."

Charts are recorded days and parts of days of price activity from the interactions between, potentially, millions of people around the globe.

Unfortunately today with all the hedge funds in operation and the government's meddling in the free market system, students of the chart world need to be more vigilant.

For those of you who might be interested, there is an excellent article in the archives of financialsense.com written by Frank Barbera, CMT.

The article, "The Coming Bull Market in Gold Stocks" was submitted on April 14, 2005.

The bottom line according to Elliott Wave Analysis which is interpreted by Mr. Barbera is that significant gains will be made by gold shares in the years ahead.

How about an 8500% gain by 2018? Repeat, an 8500% gain by 2018. Check out the article, it's a real thriller.
 By bluejay

01/31/2007  10:52PM

Gold $652.80

Gold is again today attempting to better chart resistance in the general area of $650. It remains to be seen if the precious metal can firmly surmount this area on this try.

In today's news the Eminent Person's Committee is recommending that the IMF sell 400 tons of their 3,217 metric ton position in gold to basically balance their books and to create income. A few members of this Committee are chairman Andrew Crocket of J.P. Morgan, Alan Greenspan former head of the FED and Xhou Xiaochuan a governor of the People's Bank of China.

Isn't it interesting that the recommendation comes on a day of strength in the gold price as it is approaching a resistance level.

It is understood why Greenspan and Crocket want the price lower as they are some of the talking heads of the anti gold community, the miscreants. Zhou Xiaochuan probably doesn't want gold up because it depreciates all of China's vast holdings in dollars. China in recent years has been exchanging dollars for natural resources, mainly, in Africa. When gold rises it generally causes lower purchasing power for them.

When the gold price is firmly established above $650 the gold stocks will shine.

The Philadelphia Gold and Silver Index(XAU) has been discussed in this section before with the relevance of the 150 level. The Index is composed 16 gold and silver stocks.

The stocks in the Index are included here from the highest market capitalization to the lowest:

1- Barrick Gold Corp.
2- Newmount Mining Corp.
3- GoldCorp Inc.
4- AngloGold Ashanti Ltd.
5- Freeport-McMoran Copper & Gold
6- Gold Fields Ltd.
7- Harmony Gold Mining Co. Ltd.
8- Kinross Gold
9- Agnico Eagle Mines Ltd.
10- Meridian Gold Corp.
11- Bema Gold Corp.
12- Pan American Silver Corp.
13- Silver Standard Resources, Inc.
14- RandGold Resources Ltd.
15- Coeur D'Alene Mines Corp.
16- Royal Gold, Inc.

The 150 level on the XAU has basically pushed back all advances in the last 20 years with the exception of a short lived 170 price spike. During 2006 the XAU has made 6 futile attempts to get above this troublesome chart level.

Prior to 2006, over this long time span another four futile attemps were made at crossing and staying above the 150 level.

Some years back the Dow Jones Industrials had a difficult time during a 20 year period bettering the 1,000 level. In 1983 the averages finally broke through and the rest is history with a last of 12,621.69.

The 150 level on the Philadelphia Gold & Silver Index is all psychological. It has been an area where certain anti gold groups have fought fiercely to contain prices. The investing public weighs gold in the form of gold stock performance, not too much in the metal. Mainly, because the metal is too expensive and they get more shares than ounces to feel good about.

It is also more exciting than holding the ounces for the reason, who knows how much gold can be discovered in a mine or on an exploration property? People are basically optimistic and a gold stock could "really deliver" for them with a big find.

When the anti gold forces go to work, it their desire to cause gold share owners as much pain as is possible. Usually after they get a big short position all kinds of news is coordinated to take gold and thus the gold shares lower. When investors lose money on gold stocks they basically lose confidence in gold. This is the objective of the anti gold camp.

What happens if the miscreant's efforts to suppress gold shares fails? Then the current under priced gold stocks would rocket. How do we know when this process starts? It all begins when the XAU Index starts sprinting above the 150 level.

The important thing for owners of gold shares to remember is, when we enter these money making days share price volatility could be a nerve wracking experience for you, so be prepared.

Remember, according to Mr. Sinclair gold is going to a minimum of $1,650. Hang in there and stay the course!
 By bluejay

01/25/2007  12:58PM

Gold $646.30

Recently I came across a 2005 article written by Mr. James Sinclair and thought it appropriate to post as companies and individuals try to cope with changing times.

Sunday, October 09, 2005, 7:11:00 PM EST

Jim Sinclair's Commentary

All the safety nets and entitlements seeded in fertile fields by Franklin D. Roosevelt to underpin the U.S. economic system are being withdrawn to make way for Authoritarian Free Enterprise. In truth, this is no more radical than it was for FDR in the first place.

Roosevelt required a higher price of gold and deflation to accomplish his social ends. To eliminate the modern social programs, the progeny of Roosevelt's social strategy - a long term and much higher price of gold - will be required. Deflation in terms of debt is the mechanism by which both corporate and Federal entitlements will for all practical purposes be eliminated.

Social Security and Medicare will remain but the goal post of qualification will be raised as services are constrained. That is elimination in practical terms, making way for Authoritarian Free Enterprise to live long beyound your wildest dreams.

I believe it is best to understand what is happening because in today's world there is no willingness to oppose this trend. Today's pampered youth is corrupt and indolent. We libertarians and freedom loving people are like a generation from another planet in the eyes of the history disrespecting wunderkinds. The rest of "OUR CROWD" have sold their souls to the devil.

In the reprint of Delphi Employees Face Uncertain Future due to its bankruptcy filing on the same day Mr. Sinclair prefaces the article with the following:

Authoritarian Free Enterprise is attractive to some and ugly to others. The management feathers its own nest, the employees can take a flying leap. Retirement funds will be transferred to a quasi-government guaranteed corporation that will reduce benefits, increase the level of qualification and in time bust the retirees by the collapse of buying power of dollars promised. Here is how the practical elimination of corporate entitlements takes place. The old saying "As goes motors so goes the US" will again prove itself prophetic.

Gold is the true barometer for the growing Authoritarian Free Enterprise which is engulfing Americans.

It is occurring slowly and only one in a million people in the public sector is truly aware of what is happening.

Even though gold has been strong lately it is not too late to consider a program of buying on weakness and replacing dollar denominated items for the safety of gold.

Last night I did some work with the long term monthly chart on gold and it is clearly indicating prices of $800, $900 and $1000 for completion of its second phase in this major bull market. This should all be accomplished by the end of 2008.

On the short term, gold is being pushed lower today from around the $650 area where the hedge funds and the expected miscreants are feeding off minor chart resistance.
 By bluejay

01/21/2007  8:47PM

Rick

The best advice you can give your friends is to start reading the free daily posting at http://www.jsmineset.com.

There is no better source for a good education on gold.

The site is like an ongoing classroom. Your friends will have to access past postings to get caught up.
 By Rick

01/19/2007  8:15PM

Often I get asked what to do about investing in gold, friends interested and curious, and I try to explain that finding it is better, and certainly a kick in the ass.

This inevitably baffles them and I refer whoever asks to this site.
 By bluejay

01/19/2007  7:57PM

Gold $635.40

Gold appears to be ready to continue moving higher following its last 21 day resting period that was discussed here on January 9, 2007.

The following was posted on the jsmineset.com website by Mr. Jim Sinclair today, January 19, 2007 at 5:16:00 PM EST:

GOLD AND DOLLAR MARKET SUMMARY

Gold, Silver, the USDX, Euro and Crude

Gold closed on a high note with some firmness in crude and increased inflationary figures. The U.S. dollar seems to be in a potential rollover while the Euro appears to be in a potential roll up. Silver has been playing hard around the Fib support/resistance line at $12.84.

All that adds up to a potential shot at $648 to $652 which, if accomplished, leads directly to $682. You know my feelings about this period as a platform for a significant up move in gold. That move would simply be an introduction to what will occur in 2007 and 2008.

So we end this week on a high note. Next week will be interesting.
 By bluejay

01/15/2007  12:11PM

Gold $626.00

The following was written by Dan Amoss, CFA editor of Strategic Investment in January of 2007:

The U.S. is the Richest Country in the World. You don't say, but how come...?

Shocking CIA Report Reveals America's True Standing in the World!

Recenty, a shocking CIA report came into our hands. It ranked nations based on their current account balances. You know...what's coming in versus what's going out...aka the balance sheet or cash flow.

If the flow is positive, you're creating profits or surpluses. If it's negative, you're pilling up debt, using up more of your budget to pay the interest on your debt, and borrowing more to keep it going!

As the self proclaimed "richest nation on Earth," can you guess where America is on the list? First? Third? Twenty-Fifth? Let's take a look.

#1 is Japan - $165 billion-plus
#2 is China - $164 billion-plus
#3 is Germany - $115 billion-plus

I don't have the space to give you a country-by-country listing, but to summarize...you have the oil-producing countries of the Middle East and South America...then Hong Kong - $20 billion-plus, Algeria - $18 billion-plus...and around here the countries start to slide into deficits.

The countries in Africa, the banana republics of Latin America, Australia, India...followed by the third-worst country - the U.K., at a $57 billion dificit...then Spain, second from the bottom.

But what country is last? Dead last, with double the deficit of all the other nations of the world combined? You probably guessed. America, with its $829 billion dificit!
 By bluejay

01/09/2007  9:34PM

Gold $612.30

Michael

A few years back deals were made between our government and Japan to increase the outstanding amount of dollars as Japan ended up supporting the dollar. An immense amount of these dollars continues floating around seeking a good home.

A good portion of the dollars have found their way into the stock market. This extra dollar liquidity injection was massive. The event has been labeled "Bernanke's Helicopter Drop."

Inflation is the abnormal increase in the volume of money and credit with a continuing rise in prices. To answer your question, yes rising prices in the DOW are supported by inflation in action.

In regards to gold and stock prices trading inversely during the 1980's, it could have happened as a result of an investor safety issue. Although gold was legalized again in 1974 I don't see the opposite relationship working during the 80's as interest rates were higher than they are today coupled with the generally weaker gold prices.

I believe the only meaningful comparison between stock prices and gold is how many ounces of gold you can buy with the value of the Dow Jones Industrial Average(DOW). When the ratio of ounces of gold you can buy compared to the DOW is shrinking the wealth factor of the Dow is declining. When the DOW continues to buy more ounces of gold then the wealth factor of the DOW is increasing. Currently, being in the stock market, albeit it is at a high, compared to the advancing wealth factor in gold is questionable.

Apparently, the only major relevance gold and the stock market have today is that they are both recipients of the growing money supply. Somewhere ahead in time, money will come out of the stock market and flow into everything gold as a result of the growing government and personal debt issues along with the unprecedented amount of outstanding OTC derivatives which is approaching $400 trillion.

For those that are willing to closely inspect the handwriting on the wall, we are approaching conditions similiar to the late 70's that ignited the price of gold.

The feeling here is that unless you have a good percentage of your wealth in gold and gold stocks and a very low percentage in debt and debt related issues(including stocks other than precious metal stocks, government bonds and savings accounts) you will not survive the financial tsunami that will eventually be upon us during this decade.

The price of gold has been declining for about three weeks. The last two meaningful short term metal advances began following three week declining periods.
 By martin newkom

12/30/2006  1:15PM

In years past gold appears to
have been used as a hedge aga-
inst inflation and general
world strife and tumult. It
appeared that when gold went
up the mining companies went
up but faster, especially the
"Kafirs" (so. africa) Even
deBeers would move the same.
Now, with ETFS those vehicles
seem to move with the metal
price AND with other stock issues.Gold, Silver and Diamond
ETFs are all up right with the
other (stk) market.
 By Michael Miller

12/29/2006  1:18PM

Bluejay, thanks again for your references. You prompted me to write a paper on shares outstanding and market capitalization that will compliment your last entry. I’ll post it if it makes any sense. Would you give us your opinion about the following? (For new readers, Bluejay had a seat on the Pacific Stock Exchange and is knowledgeable about the stock market. Don’t know when he began to take gold seriously.)

With the DOW hitting all time highs is that a sign of inflation? Pundits in the 1980’s claimed that gold and stock prices worked in opposite directions. When stocks increase, gold drops. I never understood the logic behind this. Do you? Also does a comparison of the stock prices and gold prices have relevance today? As you look back (and I know you are a terrific chartist) does gold lead the DOW or visa versa? Is there any relationship between the two?

I think that gold has outgrown some of its “inflation" moniker and “in time of war” reality. Buying power could be one motivation for including gold in ones portfolio. What do you think?
 By bluejay

12/27/2006  8:51PM

GOLD $627.50

Bloomberg.com
December 27, 2006
"Gold Takeovers Reach Record As Companies Fail To Find New Mines."
writer: Choy Leng Yeong

The following are a few excerpts from this article:

Mines are being depleted faster than new reserves are being found.

Cost of (takeover) reserves rose to $120 an ounce in 2005.

Last month when GoldCorp acquired Glamis, it paid $175 for each ounce of reserves.

GoldCorp's president, Ian Telfer, said the lack of new supply will help boost gold prices by $200 an ounce over the next two years to top $800.
 By bluejay

12/04/2006  12:19AM

The U.S. Dollar Index closed out the week at 82.85 which was off 2.26 points from the previous week's close. This is its lowest close since May of 2005. In December of 2004 the Dollar's key low was made at 80.50.

In October the Wall Street Journal reported that Treasury Secretary Henry Paulson had requested the Plunge Protection Team he chairs to meet more frequently. The Team is made up of the U.S. Treasury, the FED, the SEC and the Commodity Futures Trading Commission. Since Paulson's request the Dollar has gone straight down. Also, in the same WSJ story Paulson is quoted as saying, "we are overdue for a financial crisis."

The group is also looking into hedge funds and the large drivatives market. The total outstanding world derivatives contracts total an astronomical $370 trillion.

In the past months three hedge funds have declared bankruptcy. One of these lost everything they had by betting on the wrong side of the natural gas market. The loss was so large that a ripple effect almost completely ruined the London natural gas market.

Refco Securities imploded not too long ago. Part of the truth of what happened with them came out slowly. More than likely the sporadic news announcements were orchestrated by the Plunge Protection Team so that confidence in the financial markets was not disturbed.

Just the slight smell of any more hedge fund failures or the hint of derivative failures, like happened at Refco, will put downward pressue on the Dollar which will equate to higher gold prices.

If the 80.50 level on the U.S. Dollar Index gives way, expect a farther drop to the 72.00 level. If that happens, gold should better its 2006 high of $730.

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