5 replies to this topic

[Rogerdodger]

Some "expert" on CNBC today was suggesting that each time the FED promoted such stimilus such as now, that it resulted in a bubble somewhere.
Stocks, Housing, and he suggested next will be commodities.
Because I think of gold as being worth $350, it's difficult to believe it should be $1000.
So is $2000 that far away?
Then I read this from Tim Ord regarding the XAU:

Tim Ord:
It's seldom that Price Relative to Gold ratio gets this cheap with a close today at .1774. Dating back to
1984 this ratio reached this lowly level twice, once in 1986 (afterward the XAU rallied 160% over the
next year) and at the start of the bull market that started in 2000. Since the 2000 bottom in the XAU it
has rallied over 430% and the bull market is not done. Today's reading on Price Relative to Gold ratio
of .1774 suggests a great buying opportunity, only time will tell. Right now I'm not in a hurry to sell
any positions with a Price Relative to Gold this cheap. What the market could be doing now is rotating
out of the major gold companies and into the less senior gold companies. We hold positions in NXG
and KRY (less senior gold Companies) and one was modest down and the other modest up. KGC (a
senior) did get hit today along with CDE.
We remain bullish on the XAU on the bigger time frames and we are long the XAU from 12/18/07 at
162.05.

Edited by Rogerdodger, 20 March 2008 - 11:16 PM.

[Rogerdodger]

And then there is this. Kind of a reverse of Tim's ratio:
$GOLD:$XAU 5.35
http://stockcharts.com/c-sc/sc?s=$GOLD:$XAU&p=D&yr=10&mn=0&dy=0&i=p29802144389&a=30245744&r=392.png

Edited by Rogerdodger, 20 March 2008 - 11:34 PM.

[Rogerdodger]

It makes me think that the next rally in gold will see a bigger rally in gold stocks.

[swanstkdh]

that is what the market is telling me. VGZ, Kry both up after finishing their bottoming process.

[dharma]

me too! but this decline may not be done! dharma

[Woody]

It makes me think that the next rally in gold will see a bigger rally in gold stocks.

The Ratio of course can fall if Gold drops faster than the XAU but both do decline, a buy is more likely after stocks outperform metal for a period of time.