So, with one eye on the TV and the other on my laptop, I checked Wiki for the meaning and discussion of "gravitas" and in turn "dignitas" and "pietas".

It seems my Italian heritage can be traced to ancient Roman mythology.

In any event, I now get so much mail thanking me for blogging that I feel fulfilled. I even commented to a reader this morning that the concept of six degrees of separation is now in my case maybe three, possibly four.

I am, you know, just as inspired by my readers as I feel I am inspiring to many of you.

Today I received the following graphic, which pretty much explains why I switched largely into precious metals and cash, as well as energy related stocks, and why I dumped the bonds and financials and some tech in 2H05.

Now that is a picture I find inspiring!

I also received a "big picture" query and comment today that I will try to answer

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From Bob V:

"Bill: I check your site about six times per day and I value your clear perspective. If there is a better way to contact you, please let me know.

Some questions:
1 Is Bush trying to force a recession by increasing gas prices and promoting the Chinese to float the Yen so he can use his fear mongering tactics in relation to the upcoming election?
2 Precious metal, oil indexes "etc" go up and down in a somewhat predictable way on average according to long term seasonal charts (25 years). If the Dow has a correction downward, what would be the immediate effect on these seasonal charts?
3 Following a DOW drop, which sectors (tech, oil, "etc") would be the first to resume the climb upward again?
4 I have been trading gold stocks for 3 years but have sold in the last week because I have a twinge of fear. Looking at 1987 charts, gold dropped before and with more severity than the Dow. Does this mean that Gold is not a safe haven if there is a repeat situation in the near future?

Looking forward to your input---Bob V."

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Bob and others, the way to a clearer than average perspective is avoiding intrusions that I refer to as the "noise" in our lives, and stick to the "music".

The Tripartite definition of Music (wiki):

"Music, often an art/entertainment, is a total social fact whose definitions vary according to era and culture," according to Jean Molino.1 It is often contrasted with noise.

According to musicologist Jean-Jacques Nattiez: "The border between music and noise is always culturally defined—which implies that, even within a single society, this border does not always pass through the same place; in short, there is rarely a consensus.... By all accounts there is no single and intercultural universal concept defining what music might be."2

Given the above demonstration that "there is no limit to the number or the genre of variables that might intervene in a definition of the musical,"3 an organization of definitions and elements is necessary.

Books are written on this topic, so suffice it to say that with respect to trading financial markets, I am trying to help readers develop a framework for making their own decisions. Like Lee Ann Womack, I'm trying to say "I hope you dance."

I'm not telling you which dance because that would possibly be imposing. I do know there are reasons why we will always have our own perspective.

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To reply to Bob V., let me say that question #1 is a loaded one. Many readers do not share your assessment that the President is a "fear mongerer". Moreover it is the policy of the G-7 nations (not just the USA) to encourage China to float the Yuan more freely, and the Chinese authorities have said that, in time, they will.

Do I believe the President wants a recession on his watch? No. But I certainly do believe there are strong feelings in the Fed -- probably shared privately with the Administration -- that steps need to be taken to control rising inflation and speculative investment and trading, without at the same time materially affecting the housing market.

Do I think they can manage a successful walk along that tightrope? No. But it will not be for the lack of trying to do the right thing.

The U.S. Administration and Fed can intervene in markets " just like the same level authorities in other jurisdictions " but unless the actions of a G-7 or say G-20 are co-ordinated, the world of private owners and managers of capital is so much bigger, and is better focused on growing and protecting capital. So, ultimately, the capital markets are free, and growing more independent all the time.

That fact is causing stress in jurisdictions that pay less heed to the virtues of ‘save and invest' versus ‘spend and borrow'. America today is facing the wrath of the world because the owners of capital everywhere are unhappy with U.S. domestic and foreign policy, and lifestyle, that is so clearly an inflation driver.

Yes, the President and his Administration, Congress and the Fed all have great influence. But, the free market will determine the future of America because it is now a significant Debtor Nation.

Question #2 re the seasonality of precious metals is, to me at least, no longer an important one. In some cases (and metals mining is one), the old seasonality argument is like saying the summer is good for beer stocks, when we all know that summer in San Diego is winter in Sydney.

It used to be that most of the mines of the world were in the northern hemisphere, where the largest capital pools reside. But today, there are huge mines in the southern hemisphere financed by global capital. In the past 25 years, the biggest mines have been discovered in countries or regions like New Guinea, Australia, South America, Africa. So while drilling programs may follow a seasonal cycle that precludes certain activities over winter months in North America, Europe and North Asia, the work at that point is going full boar in the southern hemisphere.

Same for commodities like orange juice that once was a market controlled by Florida (and influenced by frost and winter storms), but now the OJ market is much more influenced by Brazil (with the advent of refrigerated bulk carrier ships). Winter in Florida is summer in Brazil.

Technology is rapidly changing traditional cycles, which is one of the reasons why I, for one, tend to study the trends and cycles of price series data that is say five years or less.

Question #3 is directed to what is called sector rotation of the idealized market cycle model. The picture I draw is one of a roller coaster with its peaks and valleys. As the tram car climbs the long up-slope, there is a common trend. Same thing happens on the down-slope. But at the peaks and valleys, there is usually a trend reversal that happens at different times for different segments of the tram car (i.e., the market).

Using a slightly reconfigured GICS model, I group the sectors 10, 15 and 20 (energy, basic materials and capital goods manufacturers) into one segment, which is one that is affected mostly (up or down) by commodity prices and forex rates.

Then there is the consumer segment, which is the sectors 25, 30 and 35 (cons. discretionary spending, staples, and healthcare), which, for the most part, is affected by changes in local economies " such as wage rates and disposable income, employment/unemployment, etc.

Finally, there is the interest-rate sensitive segment, which involves companies that have heavy debt structures relative to book value, such as sectors 40, 45, 50 and 55 (financials, info technology, telecom services and utilities).

But technology is ubiquitous and becoming more a part of everyday life in every part of the world. Depending on circumstance, tech could really fall in the sector 20 category (e.g., mainframe computers, and maybe even Dell, which some traders see as a manufacturer more than a tech company). It could also fall in the sector 25 category (e.,g., consumer electronics).

In any case, the idealized market cycle follows this rotation: (i) interest-rate sensitive sectors lead " up and down (ii) consumer sectors are next, followed by (iii) the commodity-price and forex rate sensitive sectors.

But GICS has its limitations in that market pricing models are not simple.

In the basic materials sector, for example, there are commodity producers/sellers, like the metal miners, and there are commodity users, such as the chemical companies that purchase crude oil and derivative products as raw materials for its manufactured goods. So you have to be aware of these factors as drivers of revenue or costs.

Still, GICS gives me a framework for understanding the trends and cycles of markets. Until I was fortunate enough to get that knowledge directly from Ian Notley, who is widely reputed by capital managers to have been the world's best trends and cycles analyst over the past 35 years, I was like most traders " lost.

But Notley taught me much more than certain aspects of technical analysis. I learned from him that I needed to study why market prices moved in trends and cycles, and that was a study that also involved understanding corporate fundamentals, quantitative measures and macro-economics. I couldn't do this on my own, so after I left our common employer " Dominion Securities " I arranged for him to personally join me in a new venture at Canaccord Capital.

And with the scope of understanding that I knew would be required for being successful in trading markets, I knew I needed a broad cut across the spectrum, which meant I had to appreciate as much as possible about a lot of things, and not get hung up on details. For example, understanding the concepts of Fibonacci series is important to me, but Elliott Wave I see as a marketing extension, and one that has taken far too many naïve traders down the garden path.

So, I just stick to what I feel comfortable with, and leave it at that. Over 10, 20, 30 years and more, the education continued, but it will never end.

To wrap up, today the precious metals cycle is the last one over the roller coaster top. Now, the question is "when is a top the ultimate top?"

In other words, in technical terms anybody can understand, is this cycle top the big one, the peak of the big wave, the end of the 2002-2006 bull market I have been talking about? Or, are we at another intermediate term cycle top with one or two more cycles to go?

It's really hard to say because the outcome will be decided in part by the future decisions of central bankers, the reactions by major capital pools ("the Gnomes"), political events, and so forth.

Going by experience with these things, I'd say this cycle is completely unique. Globalization is driving this business cycle. As for the market cycle, interest rates are reasonably low, the economic demands of rapidly developing nations like China, India, Russia, and Brazil are likely to persist, and supply of commodities is going to lag demand for quite some time.

So it appears to me to be an intermediate term cycle top that is closing in (rather than a long-term bear).

I do expect the pull-back to be a violent and short-duration one, like October 1987, and then for this commodity price dominated business cycle to continue. I simply don't see how the authorities would want a major recession or depression to work off the credit balloon that exists today. They want the air to leak slowly.

So what I'm saying is that interest rates are going to rise a lot longer and go a lot higher, and that will hurt " relatively speaking " holders of debt, mortgaged real estate, companies with heavy debt structures, and so forth. But now that I have seen the September 2005 policy change (to reflate) at the Fed, I don't see a crash coming in the housing market. It's just that prices will be relatively flat for an awful long time, and the best investment going forward will still be in the economic-sensitive and commodity-price sensitive stock groups.

Now, that does not preclude me from wanting to hold some financials. As you know, a bank can be a lending bank or a trading bank. The trading banks will thrive as long as the economy is growing and trading volumes are high. Even the lending banks with good quality customers will do well as the slope of the bond yield curve increases. Badly managed banks will simply become prey for the predators of Wall Street.

Bob V's question #4 relates to gold being a safe haven. First you have to know from what you need to be protected. Most people think that war and social conflict are the biggest worry, but I disagree.

The biggest worry to a trader is not having a place to allocate capital where it is going to obtain an economic return, which simply means a risk-free return (like from a AAA bank savings account or from the long Treasury bonds of stable nations) plus an added return to compensate for investment risk where the potential rewards are highest.

Like cash, gold is unallocated capital. However, when wealth is being created more quickly than new paper money, having cash is favored ("cash is king") until you find the best place to allocate it. But when wealth is not being created as fast as paper money, then gold is (or ought to be) favored.

So the bottom line is that the term "safe haven" ought to mean the time and place for uncommitted assets.

From the top of the stockmarket cycle in 2000, til mid-May 2005, if you couldn't find a good place to allocate portfolio funds, it best would have been in cash. But the equity markets started to grow from the end of the 1Q03, so the amount of cash held in the portfolio ought to have been low.

In the 2H05, with the reflation policies of the U.S., there was a need to sell capital market securities (stocks and bonds) and hold more assets in cash. But, as speculative demand started driving precious metals higher, it made more sense to switch from cash to gold or gold-related equities.

Bob V. says he sold his gold stocks last Wednesday, a few hours before the pull-back. If you sleep easier, then that's the best move you could make. Not everybody has the time, resources or emotional make-up to trade markets by the hour " so, Bob made a wise decision.

Sometime in the future, gold will not be a safe haven. And neither will cash.

When that happens depends, I think, on (i) a significant pull-back in equity market prices " maybe as much as 25-30 pct in the U.S., (ii) having a fairly valued Chinese Yuan " where "fair" is not a social comment, but a measure of balance in forex rates where domestic China capital market risk-reward is equal to that of its major trading partners, Japan, Korea, the U.S. and so forth.

Presently China has become a significant creditor to the U.S. because it pegged its forex rate to the USD while at the same time taking in huge U.S. capital investment and currency from the purchase and sale of goods. So the economy was becoming much more valuable, but the authorities were saying (via the peg) that their currency was not.

After the Yuan has been revalued higher, the new exchange rate will bring in less capital and fewer purchase orders for Chinese-made goods from the U.S. That will effectively slow the Chinese economy, and may even assist major aspects of the U.S. economy (although not the conglomerates that manufacture capital goods for export) .

If the Yuan were revalued immediately higher by say 25 pct against the USD, there would be a major shock to the global forex and gold markets. The USD Index (basket of currencies based on global trade) would suffer, but so too would the Euro rally, and that would hurt major aspects of the European economy, and help the Japanese and Korean economies even more.

Rebalancing international currency rates takes time.

And, there will be a time when foreign exchange rates are fairly balanced, which will be the best balance for optimizing global trade in goods and services. That will be the time that cash and gold will not be the safe havens they are today. That, really, is what the U.S. Administration and Fed, and the authorities in the rest of the G-7 nations would like to see.

And that will be the time that you will see smart investors like Warren Buffett's Berkshire Hathaway fully invested, and not holding about 45 pct cash.

Geez, I just realized that when I start writing this blog, the stuff just flows. I hope it all helps because that is satisfying the social need in me.

‘Gravitas' " what a meaningful word.