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Strategies & Market Trends : Galapagos Islands -- Ignore unavailable to you. Want to Upgrade?

To: X Y Zebra who wrote (23189)	1/25/2003 7:48:59 PM
From: X Y Zebra	Respond to of 57110

interesting, and telling charts in re: the dow and gold. gold-eagle.com <snip> SELLING PRESSURE INTENSIFIES... Last Friday we used the ADX line (and its two accompanying lines) to show the absence of a trend in the market during its recent advance. That led us to conclude that, absent a trend, the market would probably start to weaken from the top of its trading range. Unfortunately, that same ADX indicator is now betraying new trend direction. The problem is it's to the downside. The three lines at the bottom of the Dow chart are related. The green line is the buying pressure line -- while the red line is the selling pressure line. The black line is the ADX (Average Directional Index) line. The ADX is based on a smoothed difference between the two other lines. After three months of relative indecision, the red line has crossed above the green line by the widest margin since last September. That's a bad sign. What's worse is that the black ADX line is starting to rise for the first time since October. A rising ADX line usually implies the start of a new trend. The fact that the red line is the one rising indicates that the new trend is down. <snap> GOLD BREAKS 15-YEAR RESISTANCE LINE... Back on December 20, we showed gold bullion testing a 15-year down trendline extending back to 1987. That line sat near $350. Gold has now exceeded that long term bear line by about $20 (closing near $370 today). That puts gold prices almost 6% above that major resistance line. Normally, we require a 3% penetration to convince us the upside breakout is for real. We certainly think this one is. Our next upside target in gold is $400 -- the peak reached at the start of 1996. We believe that the bull market in gold represents a generational shift out of stocks and is far from over. and more.... GOLD VERSUS STOCKS... We believe there's a lot more behind this gold bull move than war jitters. The charts below show why. Historically, gold moves in the opposite direction of the stock market. That's because gold is a hedge against bad times. It doesn't matter if the threat is from inflation (like during the 1970s) or deflation (like now). The fact is gold is tied to the stock market -- but as an alternative investment. Gold prices peaked in 1980 and were in a bear market for approximately twenty years. Stocks bottomed during 1982 and were in a bull market for most of those twenty years. The charts show those two major trends turning at the same time from 1999-2001 (see green and red circles to the right). It seems pretty clear that the big bull market in stocks ended right around the time the new bull market in gold started. The moral of the two charts is that each asset class has its own time to shine. From 1982 to 2000, stocks were the place to be. Since 2000, gold has been the preferred asset. Since these are twenty year trends we're talking about, we don't expect them to end anytime soon. That's why we believe this bull market in gold is still in its early stages. The media is attributing stock market weakness and gold strength almost exclusively to the Iraq situation. These charts suggest, however, that there are much larger forces at work here than Iraq.

To: X Y Zebra who wrote (23189)	1/25/2003 8:48:13 PM
From: Jorj X Mckie	Read Replies (1) \| Respond to of 57110

I have been to Malaysia a number of times and there is an interesting symbiotic relationship between the Chinese descended population and the native Malays. The Malays are Muslim while the Chinese population is primarily Buddhist. The Muslims control government and much of industry. The Chinese control finance. If you are in a sales situation, the salesman will be chinese and the customer will be Malay. These are generalities, but definitely a predominant trend. I always found it interesting that when I was in meetings with the Malays, they would make sure to show me the picture of the president of the company posed with the King or the King's brother or nephew. Or in some cases, the president of the company was the King's or Prime Minister's nephew or cousin or some other relation. On the corruption or more accurately "trustworthiness" front, I found that the Chinese and Malays were very close to being on par. However, the Malays were certainly very open to doing business with westerners. And in many ways, I think that they would be considered to be corrupted by western influence. But it is important to remember that much of the planning for 9/11 happened in Malaysia and that the Indonesians have proven to be violently unfriendly to westerners. As far as the question of corruption and screwed up economies go, I believe that we are a more self-correcting economy. Ours are more visible because we hang them out to dry when we catch them. We shine the light on them and shame them. Eastern and Mid-eastern cultures rarely recognize it publicly, let alone look for it. I have no doubt that they will be successful with the Dinar. Maybe that is a good thing. But the mistake is in assuming that the gold has a meaningful intrinsic value that is much more meaningful than a piece of paper. In the end, they have billions of people to feed, clothe and shelter. For all the oil in the mid-east, the people are dirt poor. The money is highly concentrated in a very few people. Same with China. Where are the people going to get money that will fuel these new economic powerhouses? The only way is to empower the people and have them start to produce. People talk about the power hegemony in the U.S. and we are amateurs compared to those nations. It sounds like you and I agree on some of the handicaps that they have though. Like you, I think that the Brits see what is going on in the big picture. I think that the french and germans are thinking very short term. I suspect that their economies are much more closely tied to the mideast nations than ours. Basically, they have turned into the lapdogs of the mideast. Wasn't it recently brought to light that Germany has been selling military supplies to Iraq? And if it isn't the lapdog thing, than their actions are likely more driven by trying to fly beneath the radar in hopes that the terrorists don't take a more active role there. I think that the biggest advantage that we have in the upcoming economic war is innovation. I think that this is an area where we excel more than any other culture. I guess one of the things that I see is that a war is inevitable. If you look at Israel/Palestine, whenever there is hopes of a peaceful resolution, another wave of terrorists attack the israelis. For the tyrants in the mideast to maintain power, they need an outside evil force to keep the focus of the masses away from the tyrants. This means that in an economic or military war, the tyrants cannot win as the focus would then shift to them. But they also need to keep the conflict alive. So until they change this behavior, they will continue to be a thorn in our side, rather than a meaningful economic threat. I believe that they need us more than we need their oil. Some thoughts by Grace Zaccardi on this Message 18487095 I agree with the basic thoughts in the last paragraph. I do have a short term target for gold at $420, so I obviously see upside there. When we get there, I'll reevaluate as to whether the bull market in gold has more rally in it.