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Old 04-14-2012, 01:16 PM
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I hope this works. The link is from Barron's, a subscribed website.

http://online.barrons.com/article/SB...od=BOL_hps_mag


Alan Abelson is one of the toughest columnists I know. Pessimistic to the bone. A true Bear. Alan's research is saying the stock market, as measured by the Dow, is trading at a ratio of eight times gold. He confidently expects that ratio to shrink in the fullness of time to 5-to-1 due to the money printing. That means a 10,000 point DOW would mean $2000.00/ounce gold.
However, if you're thinking about buying PM mining stocks, he's recommending you hold off until the next big correction, which he expects sooner than later.

This past week's sell off is not a correction.... Physical Gold is positioned to skyrocket.
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Old 04-14-2012, 03:35 PM
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The article came up with the teaser paragraph or two and a subscription request for the balance of the story.
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Old 04-14-2012, 03:42 PM
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The article came up with the teaser paragraph or two and a subscription request for the balance of the story.

I was afraid of that. I did not know if my subscription allowed me to link or not.

But I layed out what the main point of the article was just in case.
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Old 04-14-2012, 03:45 PM
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I was afraid of that. I did not know if my subscription allowed me to link or not.

But I layed out what the main point of the article was just in case.
Maybe you could drag and drop a 'portion' of the article to enhance your thoughts.

Not a worry though.

I Googled up the article, let's see if it comes up whole on this link.

http://online.barrons.com/article/SB...od=BOL_twm_col

Last edited by sierra skier; 04-14-2012 at 04:16 PM.. Reason: attempt complete link
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Old 04-14-2012, 04:00 PM
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Here is a snipet from the article. Hope I can do this and not get into hot water ...


ALL THAT'S GOLD DOESN'T GLISTEN. That melancholy assay applies in particular to the shares of companies that mine the precious stuff. While bullion has taken its lumps this year, it's still up something like 18% over the past 12 months. In sorry contrast, the mining shares, which had a relatively brief but brisk upswing, have been marked down sharply, and investors' seemingly only interest in the group is to sell whatever stray nuggets they still happen to possess.

Which to us spells opportunity. More to the point, it does also to a couple of savvy investment pros -- Alan Newman, who puts out the unfailingly valuable market commentary Crosscurrents, and Darren Pollock, a seasoned, risk-conscious portfolio manager and principal of Cheviot Value Management, which calls Santa Monica, Calif., home. Both Alan and Darren evince a healthy skepticism of whatever the conventional Street wisdom of the moment happens to be, and sedulously avoid the usual sell-side platitudes. Neither is overly thrilled by the outlook for the economy.

Alan points out that gold stocks have languished or worse for months, even as equities as a whole staged an impressive rally. But he's convinced that the next move for gold shares will be sharply higher. He's strongly cautions, however, against rushing out to scoop up the mining issues until the market overall suffers a meaningful correction, which he sees as very much in the cards.

Not the least of Alan's bona fides is that he started pounding the table for gold as a super long-term investment back in September 2001, in the wake of the bursting of the dot-com bubble, and since then, bullion has risen a cool 347%. He exhibits the typical technician's affinity for charts and ratios, and on this score, he finds that the fact that the stock market, as measured by the Dow, is trading at a ratio of eight times gold vastly underestimates the potential for gold. He confidently expects that ratio to shrink in the fullness of time to 5-to-1.

The catalyst for such a sharp decline, he asserts, is the near-universal debasement of currencies around the globe, an inexorable and extended process destined to continue "until paper assets once again can prove their worth." That desideratum, in turn, will be achieved only with a great unwinding of the debt cycle, stretching out over many years.

To illustrate the extremely bullish implications for gold if he's right, the inexorable contraction of the Dow/gold ratio to 5-to-1 would mean $3,000-an-ounce gold, with the Dow at 15,000; $2,400 an ounce with the Dow at 12,000, and $2,000 an ounce with the Dow at 10,000.

Again, let us make clear that Alan doesn't expect this to happen overnight, but rather to stretch out for a bunch of years. And, in any event, he firmly believes that any would-be buyers of the gold stocks rather than bullion itself would do well to delay taking the leap, and until the "significant correction" he foresees for equities generally runs its course.

He ends his little seminar on gold by pronouncing its less-than-exhilarating recent action "an ideal consolidation." Fear has shaken out the weak holders (something, we might interject here, we've been prattling on about for quite a spell), and doubt pervades. Meanwhile, he contends "the fundamentals argue that each dollar printed ensures an increase in value for each ounce of gold."

In his astute view, the battle-scarred market vet Darren Pollock also cites the wave of liquidity unleashed by nervous governments as a compelling cause for investor concern, and a big long-term plus for gold. The stock market, he posits, has been ignoring the "longer-term requirements and ramifications of deleveraging economies," which manifests itself in the recent lessening enthusiasm for the metal and especially gold shares.

He points out, however, that one group of investors, namely the central banks, "are keenly aware of a time-tested cause and effect: the more debt monetization, the greater the likelihood of lower currency value and higher inflation." The central banks are worried stiff, Darren says, about shielding their own assets from devaluation, and, accordingly, abandoned a long-term inclination to sell off their stockpiles of gold—and are now busily accumulating it.

Out in front of this noteworthy about-face, he reports, are the creditor nations -- China, India, Brazil, Russia and South Korea. Darren calculates that, were these countries to invest "even a paltry 15% of their foreign reserves" in gold, they would have to buy all new production of the metal for the next four years. And, he anticipates, if anything, they'll step up their demand for bullion, kiting its price in the process.

If and when investors do wake up to the latent potential of gold-mining stocks, Darren suggests that they consider Market Vector Gold Miners (ticker: GDX), an ETF encompassing the major miners. Last we looked, it was changing hands at $48, a hair above a two-year low and down from a 12-month high of more than $60. Should mining-company shares tack on some of the leverage to the gold price, something they've often done in the past, Darren believes, they could be headed a lot higher.
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Old 04-14-2012, 05:08 PM
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This past week's sell off is not a correction.... Physical Gold is positioned to skyrocket.
Some bears believe that the two (Gold / DOW) will eventually reach a 1:1 ratio. The million dollar question though, is where that number is? $1000, $2000, $5000, etc? Near therm though, I believe we're much more likely to see the DOW cut itself in half and then some before gold goes up by a factor of 3 or 4 or 5. Maybe then (when DOW is less than the March 2009 lows...do you know what those are?), if and when they try to print out of it again in a big way, will gold go up and ultimately achieve a 1:1 price parity with the DOW.

Bottom line, things will likely have to be really really really bad for them to reach parity. I'm not saying it won't happen, but I don't think we're quite there yet.
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Old 04-14-2012, 05:34 PM
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Ummmmmmm........if the DOW gets LOW enough...............the price of gold doesn't necessarily have to RISE to achieve that 5 to 1 ratio.
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Old 04-14-2012, 11:55 PM
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I'm preaching to the choir about gold and PM's on SB.

But here's a chart from Friday showing silver has outperformed everything. Just self re-enforcement for myself I guess...

Look where the U.S. dollar came in...

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Old 04-15-2012, 12:04 AM
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...and then if the Gold-silver ratio goes to 17:1, like is found in the earth, I would be my best gal a fancy BOL.
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Old 04-16-2012, 01:56 PM
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Quote:
Originally Posted by txflyboy View Post
I hope this works. The link is from Barron's, a subscribed website.

http://online.barrons.com/article/SB...od=BOL_hps_mag


Alan Abelson is one of the toughest columnists I know. Pessimistic to the bone. A true Bear. Alan's research is saying the stock market, as measured by the Dow, is trading at a ratio of eight times gold. He confidently expects that ratio to shrink in the fullness of time to 5-to-1 due to the money printing. That means a 10,000 point DOW would mean $2000.00/ounce gold.
However, if you're thinking about buying PM mining stocks, he's recommending you hold off until the next big correction, which he expects sooner than later.

This past week's sell off is not a correction.... Physical Gold is positioned to skyrocket.

I would take that with a healthy helping of salt. When something is at an all-time high, and people are saying "It's in position to skyrocket!" That's usually a sign to get the hell out while you can.

Just weeks before the Wall Street Crash of 1929, they were saying that "stock prices have reached a permanently high plateau" and in 2006 they thought that home prices could only go up. No thanks.
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Old 04-16-2012, 03:26 PM
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I would take that with a healthy helping of salt. When something is at an all-time high, and people are saying "It's in position to skyrocket!" That's usually a sign to get the hell out while you can.

Just weeks before the Wall Street Crash of 1929, they were saying that "stock prices have reached a permanently high plateau" and in 2006 they thought that home prices could only go up. No thanks.

I agree. Normally when everyone's harping to buy something, I know the boat has sailed and I run for the exits.

But something tells me things might be different this time....
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Old 04-17-2012, 04:53 PM
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Heh Heh...."get the hell out"? and get into what......dollars????? Right.
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Old 04-17-2012, 07:22 PM
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"might be different this time."

Didn't see any time line on that green chart above. What was it?
(pork bellies, lol )
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Old 04-17-2012, 08:20 PM
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Heh Heh...."get the hell out"? and get into what......dollars????? Right.
Haha. No kidding.


To be honest, I'm not thinking of PMs as an investment nor am I thinking of them in speculative terms. I'm thinking of them as a legacy that I can leave for my kids and future grand kids. I'm in my 30s so I expect to live through a few major crashes and rallies over the next 40 or 50 years.
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Old 04-17-2012, 10:15 PM
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Short term if the markets and currencies collapse then PMs will be invaluable to barter with.

And if the markets and currencies some how survive(a miracle I know) then the long term trends for PM demand (industry, etc.) are very bullish.

You can't lose if you set aside a little money every month and buy physical PMs.
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Old 04-17-2012, 10:34 PM
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Originally Posted by boy george fan View Post
Short term if the markets and currencies collapse then PMs will be invaluable to barter with.

And if the markets and currencies some how survive(a miracle I know) then the long term trends for PM demand (industry, etc.) are very bullish.

You can't lose if you set aside a little money every month and buy physical PMs.
Couldn't have put it better,myself. But, I'll elaborate a little,anyway. The fundamental, bottom-line here is that the devolped world's currencies, are without question, mortally wounded. PM's can not do anything BUT rise in currency-denominated "value". Exactly when ? Who the hell knows, but there's no rational argument against this eventuallity.
The big problem that I see with PM's is that the PTB fully understand their weaknesses, and the threats to the coming order they have in mind. They have no intention of allowing gold/silver to subvert their plans (which is exactly why they quite successfully eliminated it as currency a hundred years ago). They will eventually tax and/or felonize it's posession and use,to the point that it no longer serves it's purpose.
And the AR/AK's you and me have in the closet isn't going to do anything to prevent this.
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