Dow Theory Letters
Jan 26, 2006
from the January 25, 2006 edition of Richard's Remarks
...And all the while gold
and silver are giving prospective buyers one of the sneakiest
bull market demonstrations that I've ever witnessed in this business.
It runs like this --
"Wait, don't buy gold
yet, the gold stocks are not confirming the metal."
"Hold it, don't buy gold yet, silver isn't confirming."
"Stand back, gold is overbought. You'll buy it below 500
in a few months."
"No hurry, the gold-silver ratio is telling us that the
whole precious metal situation is on dangerous grounds."
"Not yet, Newmont, the leading gold stock, is failing to
go to new highs."
"Sell your gold, the metal is up on a stilt formation --
this is dangerous."
"Stand back, gold and silver haven't corrected for weeks,
and the angle of ascent is too steep."
"No, no, the Commercials have increased their short positions.
There's a big downer coming in gold and silver."
You see, this mighty bull market
in the precious metals has been giving prospective buyers the
old "flim-flam" act all along. The bull market has
used every device known to man and the markets to keep the public
and the funds and the pros out of gold and silver.
The central banks selling gold was an early scare-device. "Golly,
how can we buy gold when those smart central banks are selling
their own nation's gold by the carload?" Then came the know-nothing
analysts who continued to tell us that gold was an "ancient
relic," and that the new accepted money is paper. Next came
the know-just-a-little technicians who warned us that gold was
overbought and dangerous to fool with. And most recently came
the brokerage houses who had forgotten about gold, and were answering
with a "duh, what?" when their customers called to
ask about the metal.
As a result, we have a bull market that is climbing in the face
of a world that is swimming in newly created oceans of fiat paper.
And ironically, it seems that only those so-called "gold-bugs"
have loaded up with gold and silver and gold shares and gold
funds and GLDs and CEFs.
Poor ignorant devils, don't they know how dangerous it is to
hold these overbought relics of the past? What's this? You say
that silver has just advanced to new highs, thereby confirming
...Feb. gold was up 4.40 to a new high of 562.50. Mar. silver
gapped up to a new high of 9.51, thereby confirming the new high
HUI was up 8.48 to 314.32.
...Precious metals continue to look good. Now everybody's waiting
for the "ideal chance" to get in.
...The Dow/gold ratio hit a new low today of 19.07, one share
of the Dow now buys 19.07 ounces of gold. At the high of the
ratio in 1999 one share of the Dow bought a fat 43.85 ounces
of gold. The times are a-changin'.
...The Fed obviously sees the deterioration in the real estate
picture which may be why they are in an all-out money-printing
In turn, gold and silver see what the Fed is doing. And the precious
metals are "adjusting" accordingly. Of course, that
isn't the only reason gold is rising. Gold is under accumulation
around the world. It's now the fourth major currency, and even
the central banks know it.
lots more follows for subscribers...
January 25, 2006
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