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Strategies & Market Trends : Precious Metals mutual funds (gold, silver, PGMs)
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To: Richard Mazzarella who wrote (210)7/5/1998 10:58:00 PM
From: Larry S.  Read Replies (1) of 972
 
Richard,

Barron's GMI was 358.99 on 7/1, up slightly from 358.22 last week. With the POG at 296.80, the ratio is 1.21, up slightly. The indicator is quite bullish.

This week could be quite interesting. I think the market will respond to the ECB reserves allocation decision and it should be announced this week and to movement in the YEN. A stable or rising YEN should help and a ECB reserve allocation with gold being 20% or more would be very positive. The ECB may also say something about their policy with respect to holdings of National CBs. A statement that no more selling will be permitted for a while could help as much as a strong reserve allocation. While I suspect the YEN will see 200 before it sees 120 again, announcements of policy changes and intervention can easily stabilize it in the near term. However, the EMU output could be negative and the YEN could go down and this would have a very adverse impact.

We could even get an announcement that Japan has been buying gold, as suggested by Murphy/Veneroso, but I'm not sure what would motivate such an announcement even if they had been buyers. However, such an announcement and/or very favorable news from the ECB could stimulate a the change to a long-term, buy-hold behavior towards gold that Ray Hughes suggests is necessary.

Cheers,
Larry Smith

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