Mostly: Classical

[Frank Pembleton]

A ... there's really nothing to update #msg-1767152 the only thing negative on my USD chart is that the 4-day MA hasn't crossed the 9-day MA ... I'm getting closer to taking a LONG position on the US DOLLAR.

SA Rand -- Daily - 6 Months



So now begs the question; WTF was I doing buying Northgate Exploration? I certainly didn't need to do this-- my plan was to hold a great deal of cash (at least 50%) and slowly redeploy it into the oilpatch ... come Monday I fully intend on divesting myself (down to core) from the precious metals sector. A core position for me is around the 30% range-- and oddly enuff I found myself averaging down in the last dip to maintain that core % in my portfolio. The only reason I did this is because I believe the price of gold will be higher in the long-term-- fwiw, I have weak hands, I detest the short term pullbacks.



One last point-- I'm becoming bullish on the general markets, this isn't such a bad thing for gold stocks, if gold (the commodity) decides to meander until January. I normally use the PoG as an indicator for which direction to go on my currency speculations-- but it ain't worth a damned as a directional indicator for gold stocks. The market can go up, so could gold stocks ... as the fed continues to pump the liquidity into the system, and fears of inflation continue to haunt investors.

QQQ -- Daily - 6 Months "as the bull market turns up"




Here's an excellent essay from last year-- IMHO, it's so good that it should be committed to memory.

...an excerpt;

Meanwhile however the main point here is that, if gold goes up and the S&P500 goes down, gold stocks will likely still go up, BUT NOT AS MUCH AS YOU MIGHT EXPECT IF YOU WERE JUST FOLLOWING THE PRICE OF GOLD. To predict gold stocks, the equity market ought to be considered too.

It especially helps to overlay the reasons for any predictions in gold or stocks, something like this:

If you think the U.S. might lower their interest rates again, this would tend to weaken the U.S. dollar, especially if all its trading partners do not lower their rates too; since gold is denominated in U.S. dollars, any weakening of the U.S. dollar would inherently raise the price of gold, which would in turn boost gold stocks. MEANWHILE, the lowering of the rates in U.S. would also tend to help stocks, at least in the short term, by drawing a lot of money out of interest-bearing investments into stocks; as discussed above, the rise in the stocks would give its own boost to gold stocks. So when U.S. interest rates are lowered, gold stocks get a double boost.

http://www.dailyreckoning.com/pfriendly.cfm?id=2785&x=h