Gold Editorials & Commentary

U.S. markets continued soaring into the stratosphere last week as the "melt-up" continued to exert its influence on key stock market sectors, particularly the OTC stocks.

In this article, I attempt to raise and level new specific accusations in the ongoing gold and silver manipulation. Before I articulate my new allegations, let me summarize what I've said to date.

From an historical perspective, the possibility that the Dow Jones Industrial Average and the gold price could converge at around $3000, i.e., the Dow at 3000 and gold at US$3000/oz. sometime in the next decade is quite supportable.

T-Bond action foretold the reversal . . . or so we thought late Tuesday.

The gold deposit scheme announced by the Indian Finance Minister aims to draw out a part of country's vast gold holding in private hands and thus reducing India's dependence on importation of gold.

What we are witnessing is the death of the dollar as we know it. This is a chess game where the loser's currency devalues greatly. All the moves from all corners of the world are centered around gold, the dollar/IMF, and the new Euro currency.

Superlative strength in computer and technology stocks . .

Underneath the surface of a bubbling and vibrant U.S. stock market is a banking industry scandal waiting to erupt.

I admit that all this flurry of activity in gold confuses me.

Introduction

The battle for supremacy pits Frankfurt against London. However, beneath the turbulent surface is fierce hand-to-hand combat of Gold vs the US$.

Relieved that business is slowing . . . based on corporate reports from housing and autos, the stock market seemingly views this as a favorable sign to embolden it not to fear the Fed, as time marches on.

The Dow Jones Co. shocked the financial world last week when it announced it was de-listing four of the 30 components that make up the famous Dow Jones Industrial Average.

The plot thickens: Along with currencies and interest rates, central banks add gold to their list of manipulated markets. But even the best laid plans of mice and men can't overpower checks and balances of the marketplace.

The war being fought between paper and gold has already been decided. It was decided when European central banks announced they would sell a limited amount of gold over the next five years and end leasing. This effectively remonetized gold.

We wrote in last week's commentary that a bottom may have been in place and that accumulation appeared to be broad-based.

I have been a student of the market umteen years. And although I first cut my financial teeth on purely Fundamental Analysis, many years of experience and financial battle scares have taught me the invaluable service of Technical Analysis.

Irregular price behavior . . . dominated Wednesday's action most of the day, with a "relief rally" of sorts in the "interest rate sensitive" areas as the afternoon progressed.

Time to dip into the mailbag, since it's been a year-and-a-half since Market Directions last fielded questions and comments from readers.

I have been affiliated with Wall Street more years than I care to remember. Consequently, I felt until today I had already seen everything -- all the possible tricks and shenanigans the securities industry could invent to deceive the investing public.

We turned temporarily bearish in last week's newsletter, but it is beginning to appear as though our bearishness was unjustified. The past week in stocks was an extremely volatile one-probably the most volatile week since last October.

The blue chip averages pulled back around 10% during the last few months, but the overall damage is more serious than that. Several sectors are down sharply and many high quality issues are down 30%-50% or more.

1998 was another banner year for equity investors. The major indices finished the year close to their all time highs and double-digit gains were again the norm.

Chart Symmetry is designed around the observation that prices tend to change direction along certain preferred gradients. New readers are advised to read the first article in this series to discover how Chart Symmetry works.

AN OPEN LETTER TO:

His Excellency The Governor

Sheikh Salem Abdul-Aziz al-Sabah

Central Bank of KUWAIT

Ref: Central Bank of KUWAIT's decision to lend gold

The gold price has fallen sharply over the past few months, and the market has been gripped by fears of large ongoing future sales by central banks. The importance of future central bank sales has been overdone by the market, for several reasons.

Conviction in technology . .

The Bank of England's (BOE's) ridiculous second 25 ton gold auction took place on September 21 ( basically giving it away at $255.75 within a few bucks of the 20 year low).

Today's reports of stronger than expected productivity gains and less than expected unit labor costs will only incite more giddy chatter of a "new era" miracle economy.

We have to go somewhere we haven't been before. We started writing about markets in 1967, seven years after becoming involved in world financial markets. Never did we think our sometimes lonely road would lead to where we think it's now headed.