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The
War Wages On The
sage awakes to light in the night of all creatures.
In February 2003, the Dow would only buy about 21 ounces of Gold and yet the price of Gold was about 100 dollars lower than today. Yet this one picture tells a startling tale. While all the gold bugs are jubilant that the price of Gold has gone through the roof, in effect it is noting but an illusion. The Dow buys much more Gold now then it could about one year ago. What gives? I have been stating for a long time that everyone needs to wake up and smell the coffee. We are in the midst of a currency war. We have no standard of pricing any currency., that is why Gold is so important because you can measure any currency against a constant. Without Gold the constant value is removed from the equation and all hell breaks lose. That is what is going on right now. While it appears that Gold is going to the moon in US dollars in reality it is not doing much and is still losing value in the strongest currencies. Gold is at 423 right now, but the Dow can buy almost 26 ounces of Gold today when it could only buy 21 ounces of Gold back in February when it was about 330 an ounce. What is going on right now is just like Gold, the Dow is also adjusting for inflation but the Dow is adjusting upwards much faster than Gold bullion. It is interesting to note that the targets I put up on an earlier essay have been hit. If we can hold in the 8,800 to 9,000 range, then the outcome looks rather interesting. Esoteric cycle analysis (our proprietary indicator at the Tactical Investor) is basically suggesting the following targets if we can hold the above ranges: 1st target will be a break of the Dow over the 10,000 range 2nd target 10,500 3rd target 11,400 Extreme target 11,7000 (posted on 22 November 2003) Full article is available here Has The Dow Ever Been In A True Bear Market? –
It looks like the Dow has been making higher lows and it appears to ready to break out. If it were to break out then the Dow will suddenly be able to buy a lot more Gold than it has been able to for awhile and it could even get to the stage where it might be able to buy 30 ounces or more of Gold. I have put the same chart below except now it contains 3 years worth of data. The chart below suggests that the Dow could easily rally and these are the two most likely targets. 1) Dow buys 30 ounces of Gold 2) Unlikely but possible, Dow is able to buy 35 ounces of Gold If anyone of these scenarios should transpire it would be only a short-term move, the main trend is still down. So I would use any such opportunity to load up on more Gold bullion. Ignorance
is the night of the mind, but a night without moon or star. THE VIEW FROM DOWNUNDER John Tyler www.infognome.com. “Sol don’t you get sick of all this stuff?” “I’m not wired to sit down to much yet” was Sol’s reply. Unfortunately, I have now caught the disease that infects this sun- drenched land. We are VERY active, moving from one sporting event to the next. There is something for every taste: The Sydney to Hobart yacht race, that even attracts the occasional US tycoon; the Stawell gift for those who are fleet of foot, and who could forget the cricket as Australia’s veteran captain Steve Waugh played his last match, knocking the Indian bowlers all over the field. Even the Prime Minister (he’s called John Howard, just in case George Bush is reading this and forgets whom I’m talking about) is out there cheering. Now Mr. Howard makes Bill Gates look like a hippie, but he’s only to be seen at sporting events, and the Treasurer is no where to be seen. They and their many compatriots seem oblivious to the world events that are shaping up. In the US I would use the term “shaping around then”, but here in Oz, we are peripheral to the periphery, but it is here that the G forces are greater. The $AUS has been riding well in relation to the $US, but gold in $AUS terms has been doing little. The market has been steaming ahead and is now in territory that we would have thought impossible in March 2003.Aussie consumer credit even exceeds that of the US citizen and we are in the midst of a housing boom. Like the US, we will soon face an election. For many it is like waking through the Blue Mountains National Park in the pitch black of night. On moment a gentle walk, but not knowing that a few meters ahead is a 500-meter drop. And yet the signs are there. Housing is actually less affordable now even though interest rates are at 40 year lows. Couples defer having children because they can’t afford to lose the second income. Many domestic industries have been lost (clothing, footwear, machine tools etc), narrowing the skills base (and this is the real wealth of the community), and education is becoming more expensive. I have no faith in fundamentals to help with timing investments. I have been listening to the Austrian school economists strut their stuff of Armageddon for years, while the market has trended both up and down, but what I am certain of is at some time they will be right. Will this be the year of blood running in the streets? I don’t know, but we’ll follow the current market trend, and salt some of our profits away into gold. There’s just one chart I wish to show. It’s a long term chart of the All Ordinaries Index. Using market entropy as an indicator (http://www.infognome.com) the market is now about as “hot” as it was at the 2002 high. There appears to be a large expanding formation so that each further move up make the market technical weaker and weaker. We have looked at specific time and price targets in The Highlander’s trading Club, but we still don’t know whether is will be a clean bowl out or caught in the slips
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