Westie - As usual, you are completely wrong. Don't you know that "Ponzi" should be capitalized? <vbg>

Yeah, hindsight trading would be nice.... I wonder if any brokers offer that?

No, I don't think we have crash conditions in place. Just wishful thinking <g>....

Of course, there's always those "low probability events" (crashes). I went back and calculated the 5-day RSI's for the SPX in October 1987 (no NDX back then). The week before the crash, the RSI dropped to a very low 16.66, recovered the next day to 43, then dropped four straight days to 10, before hitting 3.3 on the day of the crash (10/19).

OK, the $US doesn't have much room to rise, unless inflation takes hold and all fiat currencies go down the tubes. I'm just saying that a big drop in the U.S. equity markets is more likely to cause gold-mining stocks to sell off than to cause gold itself to sell off.

I check $US charts about 50 times a day. It's always tempting to extrapolate from the last few days, hours, minutes, or whatever.

Draw your same chart, but do it for the four months ending August 23. On that day, you could have made the same argument you're making today...

I can see the miners being sold off, but not Gold itself (GLD). That should pretty much follow the $US, and since a big market drop means much less in tax revenues for the Feds (and thus a bigger budget deficit), and will certainly cause the Fed to cut rates, I can't see the $US rising much, if at all.

1991

and have to wonder where the PoG would be w/o the ETF buying almost 21 tons of bullion since December 17th

Right where it is, I think. The PoG is the tail to the $US dog.

What really is helped by the ETF, over time, are the profits of the miners. Since so much money goes into the ETF, though, better profits won't help the stock prices of the miners as much as they would have otherwise.

Gold had a good day today, down only half as much as the $US was up.

That can go on for weeks, as far as I'm concerned...

For a change today, Gold has not dropped even as much as the $US has risen. Maybe that's an indication that the emotion has somewhat gone out of the selling of gold.

Well, if we hit $400, you'll have a good buying opportunity (and so will I).

And Gold itself is now at 103.5% of 200 dma, down from 112.1% on December 3.

If hit 97.0% back in July. A similar retracement would put us right at $400...

How much might the $US bounce? Seems like 10% is entirely possible. If that happens, Gold should drop somewhat more, in the 20% area (the $US is up 1% from its low, and GOld has fallen 4% in the same period). If that seems like a lot, imagine the panic in the precious metals crowd when the $US rises from the grave and begins eating unsuspecting passersby.

Dan, same thing happened back in 1991, roughly, in So Cal. Huge numbers of houses built in far-outlying parts of the Los Angeles area took a huge drop in price. Of course, they're selling for much more these days...

*** Gold-related post ***

BTW, Dan, are those asterisks meant as an advertisement or a warning?

I don't doubt that many of those billion and a quarter bucks would have found their way to buying bullion or gold shares if this Trojan Horse didn't get placed in our midst.


Maybe and maybe not. Please note the following, from your post:


``We use it as a parking place for money,' said Gregory Orrell, president of Livermore, California-based Orrell Capital Management Inc., which has 7 percent of its $76 million in cash and gold-backed shares. ``Instead of holding cash, we can put it there.'

and this:

Demand for the new gold fund, started Nov. 18, has been spurred by fund managers barred from owning physical commodities

Looks like an awful lot of the money in the ETF would not have been in mining stocks or bullion.

Still, there's no doubt that the ETF has tempted some of the money out of mining stocks (although the market cap of the ETF is still miniscule compared to that of the miners).

Paradoxically, money put into the mining stocks just makes those stocks more overvalued, as it does not increase the companies' sales at all. On the other hand, money put into the ETF means more of the mining companies' product is being consumed and thus makes their stocks healthier.


Cheaper to buy Bullion
The gold fund is an expensive way to buy gold, said Stuart Flerlage, managing principal of Brownstone Advisors LLC, a New York-based investment company that has $100 million in futures including gold. Investors pay a 0.4 percent fee for the fund's expenses, according to the prospectus. ``It's a lot cheaper just to buy the actual bullion, or the futures,' he said.

OK, then, some people will still buy the futures. I don't believe that many will buy the bullion because of the 0.4% fee, though. The in-and-out costs and storage costs, even for the big players, would probably be several years' worth of fees. For you and me, it would be 10+ years.

Gold is getting creamed today. Move in $US doesn't seem to justify it. Was there news of some kind?

Additionally, I find it hard to believe for a minute that the SEC would approve a trading vehicle that conceivably would aid and abet a rising PoG, a known harbinger of inflation, which most will concede is diametrically opposed to Greenspan's desire to keep a lid on interest rates
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Hmmmm.... another way I never looked at it. Most horses would rather pull a cart than push it, but I s'pose that in today's Market anything could be true.

Where's Jonathan Swift, now that we need him?

(2) You might want to revisit your decision to place the bulk of your in the movements of an ETF when the underlying metric is subject to the whims of the 'riggers
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I don't need to revisit it. It keeps revisting *me*!

You might want to revisit your decision to place the bulk of your in the movements of an ETF when the underlying metric is subject to the whims of the 'riggers
=============================================================

OK, whether it's rigged or not, the "underlying metric" is the same for both GLD and the miners, is it not? (I assume you're saying the alternative to GLD is mining stocks...)

Historically, the POG has moved dobule the amount the $US has moved, and the HUI has moved double the POG. By that metric, the HUI is just as far behind today as the POG (and GLD) is.

Gawd, this is frustrating... watching the $US collapse, then turning to Gold and seeing it rise like a lead balloon. It "should" be up about $9 based on the $US's fall since Thursday, and it's struggling to hold a $3 gain...

Dan - Seriously good, and a keeper, as well.

Not much in there that I didn't already know, but reading it all in one place, and in such detail, had the effect of further eroding my faith in the mining stocks. Heck, if it's that hard, and that expensive, to get gold out of the ground, it makes the stuff that's already out (and coined) that much more valuable.

IOW, my current preference for GLD, and my intention to buy a bucket of coins, has been strengthened.

Wow.... wouldn't it be something if you're right?

Looking back to 1990, the Market also dropped the first week of 1991, 93, 95, 96, 98, and would have been way down in 2001, except for the surprise rate cut... so I guess it drops about half the time.

That's a good one. Mind if I pilfer it? To whom is attribution owed?

BTW, any idea what happened to our Dollar Index? If December isn't being traded any more, what is?

http://quotes.ino.com/chart/?s=NYBOT_DXZ4&v=s&w=5&t=l&a=2

NEM - big feature yesterday (continued today) in the Denver Post.

http://denverpost.com/Stories/0,,36%7E11%7E%7Efilter%7E12_12_2004,00.html

I have to say that these pollution problems seem like a major concern, and I doubt that other miners do much better than NEM.

OVTI might see some tax selling until early next week...

I like it better when the CFO buys...

1) He probably has less money than the CEO
2) He knows "the numbers" better
3) He's more conservative, being a numbers guy
4) He's less likely to be making a "cosmetic" purchase

Anyway... the CFO bought 12k shares a month ago, upping his position by about 60%. He paid $4.17/share

What I think now is that the dumb, lazy money will be drawn to the ETF and the smart DD doing money will play the superior leverage that is to be found in the miners.

=============================================================

Jeez... so 3/4 of my money is dumb and lazy? That's OK. A few more days like today and it'll be an endangered species, anyway.

My sense is that the Gold EFT's stand to lose some of their main stream media support and some of those retail dollars will ooze back into the miners.
===========================================================

Since GLD is tied to the PEG, the arbs won't let it stray far, unless there is a major scandal in which it is demonstrated that it's a scam, which I think unlikely.

Of course, money can "ooze back" into the miners. That would mean that GLD will have to sell off some of its bullion.

In spite of the fact that the appearance of GLD has taken a lot of money out of the miners in the last couple of weeks, from a strictly fundamental point of view, the ETF can only be good for the miners, as it is their single biggest customer.

As you've been saying, we'll eventually get to the point where the speculative money is in GLD, and the very speculative money is in the miners. Once that point of balance is reached, GLD and the miners will act in tandem.

Dan, hmmmm.... Well, I don't know what to make of all that, so I'll just pick on the one thing that I know is wrong.

Lassonde did not sell "nearly all his shares". What he did was to convert and sell a lot of deeply in-the-money options. One cannot say that he sold "nearly all" unless one knows how many in-the-money options he has left. I, for one, do not know, but I would be amazed if he sold a large part of his stake, as he wouldn't be President of the company for long, if he did.

You can accuse me of being picky, if you like, but I get the impression that Mr. Murphy wants to say something, and he won't let the facts get in the way.

Dan, do you really think there's any chance that GLD won't straighten out whatever inventory problems it has?

Question about RSI calculation - If anyone could help me...

I'm trying to calculate historical RSI's. I use the definition that StockCharts posts under their tutorial, but I cannot get the RSI's that they themselves post to actually match their own definition. Can anyone perhaps point me to an equation for calculating RSI's other than the one on StockCharts?

Well, here we go... Since I got out of miners and into GLD, I'm expecting to only lose a ton of money today, instead of two tons.

Dan

Frankly, I have trouble getting behind the idea that 'suddenly' the allure of the miner's leverage will be rendered moot because it's easier to track the price of gold with owning shares in an ETF.

Some of the money in the miners wasn't interested in leverage. It just wanted to be in gold. This move out of the HUI could still have a ways to go, since the HUI is still about $40B market cap, and GLD is probably still under $1.5B.


Pretty soon there will be a second Gold ETF (Barkley's)on the scene...... what then?

Nothing. Doesn't matter if there are twenty. Only the first one matters, IMO. A silver ETF will hurt the HUI some more, though, and hurt the PM mutuals funds even more still.

...and I converted a bunch more of my mining funds to GLD today. HUI down 2.7% again on a day when the POG barely moved. HUI is now down 10% in ten days, while POG is slightly up.

Seems to me that there is an indeterminate, but sizable amount of money in the mining stocks that really just wants to be in gold and, now that GLD is out, it has somewhere else to go.

It's going to be way over $1T, and that's if they only change one fourth of the program into personal accounts.

Thanks.... I guess I'd better go and talk to some dealers and find out what they'd pay me if I wanted to cash in a coin or two. I'm not interested in numismatics, per se, if by that you mean buying coins for something other than their intrinsic metallic value. I'm just interested in coins as a medium for buying and selling gold without having to go thru assays every time.

*** Gold coin question *** Anyone have a recommendation for a retailer of gold coins who will ship them in exchange for wire transfers? I've used Goldmasters in the past, and they seem to be OK... "***" used by permission

Dan, the Yen is manipulated, not directly, but indirectly, via support by the Japanese Central Bank of the Dollar, which is accomplished by extremely heavy purchases of U.S. Treasury notes. OK, that's not "pegging", per se. It's "manipulation to maintain an unnatural exchange rate", which has sixteen syllables, so I got lazy and went with "pegging".