Considering that inflation is alive and kicking everywhere, and I believe that basic materials could have a poor performance in the next few months because economy is slowing, I'm wondering if inflation could keep on pumping prices of other products such as agriculture and livestock, as they are included in the Goldman Sachs commodity index GSAL (and there in an ETF in Europe for it). But I can't find any data to understand how this index behave compared with other stock indexes and with economy in general. Do you have any links to suggest showing data, and any information about this matter?

Lelik

James Flanagan does some excellent Gann cycle analysis on these indexes:

http://gannglobal.com/gateway.php?p=

Click on the free videos.

WSJ has an interesting article on IVN and mining in Mongolia. Article covers past history of Robert Freidland (warts and all) as well as current efforts in Mongolia.

http://online.wsj.com/article/SB116786075624566310.html?mod=djemTMB

(May need subscription to access)

No position.

Got stopped out of my USO this a.m. No profit in fighting the tape on energy stocks right now.

A bit of negative divergence this week between most PM miners and the underlying metal prices.....

"The strength of the $USD in the past 24 hours is the result of Fed intervention. That cannot last. Similarly, the sell-off in gold by the Fed in the past 24 hours cannot last."

Bill - how do you come by this kind of information? Thx.

Gold and silver miner sell-offs has been brutal the past couple of days. Many stocks are now well below their 50 and 200 day MA. Isn't this is a significantly bearish sign? Losses are in the 5-10% range for stocks just in the past 2 trading sessions.

Every sell-off in gold and silver last year was brutal, but ultimately paid off if you bought into it. The key seems to be to ease in, and cap your total investment in the sector to a % you're comfortable with. I like holding positions in most sectors for at least a few months, but short-term trading has worked well with gold.

I just looked at about 35 gold and silver charts, a real mixed bag. AEM, made a new high so the chart is intact. GFI is struggling to hold above its downtrend line from May 06. Best advice is Sinclair's advice, let 1/3 go on spikes and re-position on dips. The market capitalization of this sector is so small that volatility is enhanced and this is what will give an exceptional payoff when the rush begins.

Long AEM, GFI, SIL, GLD, CEF, KRY

AMGN is getting a lift from Bear up-grade; let's see if it can follow through for a few days. Is DNA participating in sympathy?

Long AMGN, DNA

Lelik,

With regard to your question on Goldman Sachs commodity index GSAL... If you have a symbol of a stock or fund that tracks this index, I can download historical data and run an simple correlation study which will give you the data you need.

...david...

Under Cara's Interactive Links
see open futures contracts
Goldman Sachs commodity index
symbol is GIF07, but depends on your platform

Remember, That Paulson modified its weightings for oil or gas (this probably helped put under Amarath and enriched that buyers of their assets)so the correlation could be skewed.

Good Luck

Rydex Commodities fund (Mutual Fund)tracks Goldman Sachs commodity index. Symbol = RYMBX

David/Lelik

There is an ETN....symbol GSP that tracks GS commodity index in US.

With respect to the action in Gold it's all in the US Dollar. Do you want proof?
OK, just print a chart of Feb Gold from Oct 06 to date and turn it upside down. Now, print a chat of the US dollar (I use a continuous futures chart here) from Oct 06 to date. When comparing the two charts in this fashion they are nearly one in the same.

So the question becomes (IMHO), what is your fundamental belief in the direction US Dollar, strengthening or weakening from here. In my mind, when you answer this question, you answered whether to buy or sell gold.

It's never fun in rough seas.

Lelik,

If you go to Yahoo finance. Enter RYMBX in the quote screen. Click on the chart. You will get to an area where you can compare the chart with other indexes or stocks.

This allows a quick and easy comparison with regard to performance and correlation.

...david...

We have a new potential killer app announced (or at least new to me on the consumer level). Sandisk has relased a flash memory hard drive for use in laptops which kills the traditional hard disk performance, is more durable, and uses less power.

Key questions are whether or not they own the IP portfolio on this technology as well as that would give them royalties in three huge markets - 1) camera memory, 2) mobile phone memory, and now 3) laptop hard drives.

With stock at 42 and approaching 36-38 accumulation zone we need to keep an eye on this ne.

Here are a few relevant links:

http://www.sandisk.com/Assets/File/pdf/oem/SanDisk%20SSD%20UATA%205000%201.8.pdf
http://www.sandisk.com/Oem/Default.aspx?CatID=1478

There are also news articles out on it if you read google news search.

Best regards,

BG

Re the direction of the USD: IMO, there are too many people waiting for it to sink. Reminds me of what seemed like an easy bond trade when the Fed began to tighten. Yields on the long bond went up for awhile, but then got stuck in a "conundrum," which still hasn't gone away. Anyone who shorted the long bond is still waiting for a payoff. What's not clear to me right now is which position would constitute the contrarian play in gold. There is (supposedly) close to a record low in the number of (large lot) long contracts in gold and silver. On the other hand, it's hard to find a financial site that doesn't mention a falling dollar. Betting on the unexpected is often the better trade, so I'm going to feel better about my position in PMs when they stop talking about the dollar.

BG (or Soulek1?),

Thanks for the reminder about Sandisk. You're right: We should be watching for this one. A good entry point is looming....

G/S

Motorola slashes estimates. Is this the next CEO to leave with a huge bonus?

http://tinyurl.com/y438t7
...expects to make 13 to 16 cents a share for the quarter ended Dec. 31, far short of the 39-cent Thomson Financial analyst consensus estimate.

"We are very disappointed with our fourth-quarter financial performance, but we remain committed to the strategic direction and long-term financial targets we discussed at our annual analysts meeting," Chief Executive Ed Zander said in a statement.

2nd_ave,

Your comment is right on. I think there are too many people talking about a fall in $US (so presumably gold will rise). That kind of scares me. However, I also recognize/feel that the general weak hand participants are probably getting increasingly dis-illusioned by all the talks on gold.

Frugal at 1stMillionAt33.com

following the nominal price of gold is hardly the way to make good returns in the gold market (imho). in the 1930's, the price of gold was fixed, and investors in gold mining stocks made great returns. How? Because gold mining companies produce great earnings when gold outperforms commodities. or when the price of the companies's output (gold) is relatively stronger than the costs of their inputs (energy, base metals, labor). so if you are looking for the contrarian view in the gold market, it is that you might make a killing on gold stocks while the US dollar doesn't actually implode. the powers that be WANT a weak dollar; a strong dollar is deflationary/recessionary etc. so for everyone fearing/hoping for a US economic disaster/gold bull market, a strong dollar (think leveraged players desperate for cash to cover margin calls and bad adjustible mortgages) could be part of this equation.

following the nominal price of gold is hardly the way to make good returns in the gold market (imho). in the 1930's, the price of gold was fixed, and investors in gold mining stocks made great returns. How? Because gold mining companies produce great earnings when gold outperforms commodities. or when the price of the companies's output (gold) is relatively stronger than the costs of their inputs (energy, base metals, labor). so if you are looking for the contrarian view in the gold market, it is that you might make a killing on gold stocks while the US dollar doesn't actually implode. the powers that be WANT a weak dollar; a strong dollar is deflationary/recessionary etc. so for everyone fearing/hoping for a US economic disaster/gold bull market, a strong dollar (think leveraged players desperate for cash to cover margin calls and bad adjustible mortgages) could be part of this equation.

...David...
Thank you for your information. Yes, I'd like to see a correlation between the GSAL index and the economic cycles (and stock indexes), but I can't find any historical data for that index (including only Agriculture and Livestock, unlike other commodity indexes it doesn't include any energy or other resources). The European ETF is too young to make any study http://www.wallstreet-online.de/etf/436682.html
If you can find any data for this index, I will be grateful.

Lelik-

Martin Pring studies Intermarket Relationships as Bill will well tell you. His site may have some free materials. He put out a lengthy free piece last year calling a top in May (I believe)that contained historical looks at commodities and the markets.

MarkM--Pring's piece called for a major bear market. I respect Pring's work very much, but the failure of that bear market to materialize in that time frame reminds me that prognostications, despite the skill of and respect for the prognosticator, are just educated guesses.

Okay, thanks for that. I mentioned it as a service to another reader. Your point has been made several times lately. Even in my posts I call it "navelgazing" and an attempt to see what may be coming over the horizon. I do not position it as trading advice. Am I missing a subtler point of yours?

As readers know, I DO occasionally send up a flare or two about gold. A few think the advice not unhelpful just as a couple days ago I mentioned that I do not like gold and energy here.

Good call, MarkM.