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Strategies & Market Trends : Precious Metals mutual funds (gold, silver, PGMs)
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To: Dan P who wrote (656)5/12/2002 10:34:00 PM
From: Larry S.  Read Replies (1) of 972
 
Dan, et al,

It was Paul Ross that posted (about #10) the reference to the discussion of the meaning of the GMI/POG ratio. The reference was: essextrading.com It suggests that, for a high probability of the price being substantially lower a year later, the ratio would have to be greater than about 2.25. We have a long way to go to reach this level but this doesn't mean that the price won't go to new low without first going higher. However, you may recall my earlier discussion of the analysis and my belief that the data wasn't an adequate basis for the conclusions presented. I still hope that some day I will have time to put all of the data I've posted into a spread sheet and try to make something of it. It is clear that the GMI is a better index than the XAU for gold but that is about all I can say.

The up trend in the POG sure appears strong; though it appears ready to correct a bit. The lease rates came off their low this past week and that bothers me a bit. For the bull to continue, I think lease rates must stay low indicating an adequate supply ready for leasing but limited demand, which would indicate an expectation that the price is moving higher.

I didn't find any mention of gold in Barron's this week except in market statistics.

The GMI/POG ratio:

On 05/09, the Barron's GMI was 479.10 up from the previous week's 449.86. With the POG up at 311.15 (05/10), the ratio was up slightly at 1.54.

The ratio a year previously was 1.24.

Cheers,
Larry
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