Wayne, et al,
Barron's GMI was 310.07 on 1/28/99, down from 337.16 last week. With the POG up to 285.40 (1/29), the ratio is 1.086, down significantly from last week's 1.175 and the second lowest ratio recorded since we starting looking at in early 98. It continues in the range of values that strongly suggest that the XAU will be substantially higher within a year. See post 9 on this thread for a reference to data on which this is based.
For what it is worth, Auger, the Elliott Wave expert (http://www.mgl.ca/~yauger/wrapup.html#wrapup), below but only after a little near-term strength. Auger's also projects a low this Summer. You might also be interested in his plot of the POG/XAU ratio. It is equivalent to the inverse of our ratio and his chart show more extreme values.
It may also be of interest that PEI's projected short- and intermediate-term trends for gold are relatively neutral and their short-, intermediate- and long-term trends for silver are all strongly bullish. However, in his latest issue of World Capital Markets Review, Armstrong commentary continues to be relatively bearish for both gold and silver. He seems to expect major lows for both in the year 2000. The PEI Website url is pei-intl.com. You get to the market trend indicators by clicking on "Global Market View" on the left of the screen.
I should emphasize that these comments/observations are offered for information only. I have no opinion on merit of any of these projections; particularly with respect to the many very bullish projections posted on other threads. However, I would like to add just one personal thought that occurs to me each week when I post the GMI/POG. It is that it seems axiomatic to me that as the price of PMs fall below the cost of mining them, the price of shares of related mining companies will fall more rapidly and the ratio will collapse. Therefore, the ratio is telling us where the price of PMs is relative to their cost of production. A collapse in the ratio is equivalent to saying there is blood in streets - the time to buy. I don't mean to suggest that the ratio can't be used in other ways, e.g. a short-term, over-bought/over-sold indicator, but that, while the ratio has no magical significance, it has a sound fundamental basis from a long-term perspective.
I would be very interested in anyone's comments on the merit/signficance of the ratio.
Cheers,
Larry |
