Dan, et al,
I apologize for neglecting the post the GMI ratio bit for so long but it is unclear to me how it would have helped us anticipate the rally this week. The European banks sure changed the market. In any event, just to keep our record complete the missing ratios are:
On 9/02, the Barron's GMI was 339.75, down from the previous week's 343.29. With the POG down to 254.40 (9/03), the ratio was 1.335.
On 9/10, the Barron's GMI was 335.36, down from the previous week's 339.75. With the POG down to 256.00 (9/11), the ratio was 1.31.
On 9/16, the Barron's GMI was 321.32, down from the previous week's 335.36. With the POG down to 255.18 (9/17), the ratio was 1.26.
On 9/23, the Barron's GMI was 347.76, up from the previous week's 321.32. With the POG up to 257.00 (9/24), the ratio was 1.35. The ratio one year ago was 1.29.
The ratio continues in the range of values that suggest, based on the data referenced in post 10, a substantially higher GMI within a year. However, it has been in that range for more than a year. But, I suspect that the action by the European banks announced Sunday has changed market parameters and that we will see a higher GMI sooner.
I think the gold carry trade has been dealt a crippling, if not fatal, blow and that the loss of this source of supply has significantly changed the supply/demand balance. It is inconceivable to me that a substantial amount of the free money made available by the carry trade would not have been misused. If so, the next few weeks may see a lot blood spilled on both sides of the market but, in the end, the POG and the prices of PM stocks and Funds should be substantially higher. It is going to be an interesting Fall.
Cheers,
Larry |
