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http://ww2.dowtheoryletters.com/MembersOnline.nsf/PrintView+Rich...December 29, 2005: "You are a den of vipers. I intend to rout you out and by the Eternal God I wil rout you out. If the people only understood the rank injustic e of our money and bank ing system, there would be a revolution before morning ." --Andrew Jackson, 1828 (to a group of investment bankers trying to persuade him to renew their bank charter). Rus s el no te - Tough old President Andrew Jackson closed down the Second National Bank, which was somewhat comparable to the Federal Reserve of today......................................................................................Question - Is silver a precious metal? Answer - Yes.Question - Is silver a monetary metal?Answer - Unclear. Silver definitely used to be a monetary metal, and originally the dollarwas defined in terms of silver. We’ve had silver coins in the US until recently when the Treasury substituted base metal for silver in our coinage. Even the copper has been taken out of our lowly penny. If the Treasury could find a way of making out coins out of bat guano, I have no doubt that we’d be pocketing "bat dimes and quarters."But let’s turn the precious metals, gold and silver (I’m leaving out platinum and palladium). Since last September silver has been outperforming gold. Classically, it took around 15 ounces of silver to buy one ounce of gold. That ratio has faded away, and todayit takes 57 ounces of silver to buy ...

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http://ww2.dowtheoryletters.com/MembersOnline.nsf/PrintView+Rich...
December 29, 2005: "You are a den of vipers. I intend to rout you out and by the
Eternal God I wil rout you out. If the people only understood the rank injustic e of our
money and bank ing system, there would be a revolution before morning ." --Andrew
Jackson, 1828 (to a group of investment bankers trying to persuade him to renew their
bank charter).
Rus s el no te - Tough old President Andrew Jackson closed down the Second National
Bank, which was somewhat comparable to the Federal Reserve of today.
.....................................................................................
Question - Is silver a precious metal?
Answer - Yes.
Question - Is silver a monetary metal?
Answer - Unclear. Silver definitely used to be a monetary metal, and originally the dollar
was defined in terms of silver. We’ve had silver coins in the US until recently when the
Treasury substituted base metal for silver in our coinage. Even the copper has been taken
out of our lowly penny. If the Treasury could find a way of making out coins out of bat
guano, I have no doubt that we’d be pocketing "bat dimes and quarters."
But let’s turn the precious metals, gold and silver (I’m leaving out platinum and
palladium). Since last September silver has been outperforming gold. Classically, it took
around 15 ounces of silver to buy one ounce of gold. That ratio has faded away, and today
it takes 57 ounces of silver to buy an ounce of gold.
Many metal experts believe that silver is too cheap and are hoping that the ratio heads
towards the old 15-to-one again. Since September, the ratio has been contracting in favor
or silver. The daily chart below shows the ratio of gold to silver with silver increasing in
relative strength.
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How about the action of silver itself. The daily chart of silver below shows all the action
since late-2003. And yes, silver is somewhat overbought today (check RSI and MACD),
but like gold it keeps pushing -- or I should say it stays overbought.
There is no silver ETF, so if you want to buy the metal you have your choice of buying
silver dollars, silver bars or silver futures. There is one other way, and it’s through buying
Central Fund of Canada listed on the Amex (see daily chart below). CEF buys and owns
silver and gold (the metals) on a ratio of 50 ounces of silver for each ounce of gold. Thus
this closed-end fund consists of about 4 4 percent silver.
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Stock Market -- The stock market has been a source of frustration for investors this year.
It’s been very selective, with the big "backbone of the economy" type stocks basically
going nowhere. Both the Dow and the S&P today are about where they started the year.
At this point, there’s a decided lack of buying interest. Yet the news is excellent with the
newspapers and magaz ines falling all over each other in their eagerness to announce good
economic progress.
So what’s the problem? The problem is too much bullishness plus the burden of
overpriced stocks. In other words, the good news has already been discounted. Consumer
confidence is at a four month high, the VIX is down to 11, while the percentage of bullish
market advisors has been above the percentage of bearish advisors during every week this
year.
The risk premium in holding common stocks is dangerously low, meaning that there is no
allowance being made for disappointment or for anything going wrong.
So we’ll be starting the year 2006 with high-priced stocks, high expectation, and low
dividend yields. This is the formula for potential trouble. We’re dealing with a market that
is not positioned for any disappointment, let alone any real trouble.
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TODAY’S MARKET ACTION -- My PTI was down 2 to 5691. Moving
average was 5671, so my PTI remains bullish by 20 points.
The Dow was down 11.44 to 10784.82 with no movers in the Dow today. Actually, no
Dow stock moved as much as a single point today.
Feb. crude up .50 and back above 60 again to 60.32.
Transports were up 47.41 to 4241.34.
Utilities were down .42 to 406.63.
There were 1602 advances and 1650 declines. Dow volume was dominant and was 55.8%
of up + down volume.
There were 79 new highs and 85 new lows. My 5-day high-low differentials declined
from yesterday’s plus 72 to today’s minus 2.
Total NYSE volume was 1.24 billion shares.
S&P was down 3.75 to 1254.42.
Nasdaq was down 10/783 to 2218.16 on 1.10 billion shares.
My Big Money Breadth Index was down 4 to 697.
Mar. Dollar Index was down .20 to 90.85. Mar. euro was up .15 to 118.91. Mar. yen was
down .04 to 85.60.
German DAX was up 11 to 5458. Nikkei was up 149 to 16344.
Bonds were almost unchanged. The 30 year T-bond yield 4.53%. The 10 year T-note
yields 4.37%. The yield curve is flat as a pancake.
Feb. gold was up 1.20 to 517.50. Mar. silver was down 5 to 8.88. Jan. platinum was down
6.90 to 964.20.
HUI was up 3.14 to 280.91.
ABX up .75, AU up 1.05, GG up .88, NEM up .29, SSRI up .34.
Gold pushing stubbornly higher. Momentum turning up, stochastics turning up,
histograms turning up. Very impressive. Is the correction over? I’m beginning to think it
is. If so, a lot of people were taken out on the last sharp drop. In a bull market you don’t
sell the corrections, you buy the declines..
STOCKS -- My Most Active Stocks Index was down 1 to 411.
The five most active stocks on the NYSE were -- LU down .03 (how many traders have
lost money on this bow-wow?), PFE down.15, GM up .40, F down .03, and GE up .08.
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The VIX was up .28 to 11.61.
McClellan Oscillator down 13 to 11.
CONCLUSION -- There’s just one day left for the long-promised "year-end rally."
Or let’s just say that it was absent this year. The market seems puzzled. The problem is
that at these high prices, next year’s good news, assuming that there is any, has been fully
discounted. Let’s just hope there isn’t any bad news, because if there is, this market is not
ready for it.
Remember, we have three more years of President Bush and the boys (and Condi) to
wade through. Our defense -- gold plus the will to survive. And no, I’m not a Democrat --
I’m a free thinker, and my motto is "The less government, the free-er and safer I feel." The
United States Constitution was set up with a system of checks and balances to PROTECT
us from government. Thank God for the free press and the United States Constitution.
When a dictator takes over, he removes three items. He takes away the newspapers so that
we don’t know what’s going on. He takes away the guns so that we can’t protect ourselves.
And he takes away gold so we can’t bribe the border guards and get the hell out of the
country.
Have a great three day weekend, and above all keep a healthy skepticism.
My best --
Russell
............................................................................................................................................
We’ve got another great holiday coming up, so maybe it’s time to think about health. You
think you’re healthy, you think you’re in good shape? Forget it -- the piece below is about
my favorite health nut and body-builder, it’s Jack the Great LaLanne. At the age of 91,
Jack LaLanne is still a physical marvel. There’s just nobody else like him. And when he
starts talking about health -- back off, buddy, he’s a wild man! And you’re an out-of-shape
-- you wimp. Russell
from the New York Times, 12/27/05.
This Phone Is Heav y
By (boldface) CAMPBELL ROBERTSON
A year of party hopping does things to a person. Particularly it makes the person softer,
slower, rounder, with a tendency to fall asleep during interviews. Was it the crŁ me fraîche
and caviar-topped toast points? Perhaps the maple-glazed duck tartlets? Or the spicy
things with the red stuff in the thing?
It matters not. The new year is approaching, and it is time to make a life change. While
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we admire ANNA NICOLE SMITH’s svelte new physique, we are wary of trying her
TrimSpa pills - the operational ingredient, Hoodia gordonii, sounds like a surf band.
Instead, we called the veteran bodybuilder and scourge of girly men: JACK LALANNE,
who at 91 is old enough to be Ms. Smith’s husband.
O.K., we lied. Mr. LaLanne’s publicist contacted us because of his Power Juicer Elite.
"There’s nothing like it on the market," Mr. LaLanne begins. "I’ve got one thing on my
mind: to help people. I’ve never thought about making money."
But to our delight, Mr. LaLanne is not very good at staying on message, and the
conversation quickly turns to his morning routine. "I get up at 5," he says. "I work out for
two hours. One half with weights, other half I do water exercises. I do chin-ups and
push-ups. I do all the weights. I do the whole bit."
We’re impressed. He asks us our waist size, which the publicist, who is listening in, says
is pretty good, but Mr. LaLanne says it needs to come down: "If you can’t afford 20, 30
minutes, you’ve got to be psycho. People sit around on their big fat backsides. You see
these guys saying, ’I don’t have the time.’ "
Boldface: Well, we are pretty busy.
Mr. LaLanne: Are you sitting down?
Boldface: Yes.
Mr. LaLanne: Scoot down in your chair. Now move your legs like you’re pedaling a
bicycle.
Boldface: O.K.
Mr. LaLanne: Now do it faster. Now faster. Faster! Faster! Faster! Faster!
Boldface: We are about to pass out.
We catch our breath as Mr. LaLanne laments the general wimpiness of the culture. Then
he asks us again if we are sitting down.
Boldface: Uh, yes.
Mr. LaLanne: Stand up.
Boldface: We are standing.
Mr. LaLanne: Now sit down.
Boldface: O.K.
Mr. LaLanne: Stand up. Sit down. Stand up! Sit down! Stand up! Sit down!
Boldface: Mr. LaLanne, people in the office are looking at us funny.
Mr. LaLanne: See, you can do that while you’re watching television. During the
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commercials. Write that down.
Boldface: We are too tired to write.
Again, we catch our breath as Mr. LaLanne laments the general wimpiness of the culture.
"Why are you living? Name one thing in your life that’s meaningful that doesn’t take
effort - sex, life, saving money, work, religion! It’s your health that counts the same thing!
When you go to restaurants, why do you have to eat all this damn junk?"
We try to ask a question, but Mr. LaLanne is somewhat hard of hearing, and he’s whipped
up into quite a lather. Finally: What is your New Year’s resolution? "My New Year’s
resolution is the same every year," he says. "I want to do the best I can with the
equipment I have."
Then Mr. LaLanne is off again. We miss most of it other than: "If it tastes good, spit it
out; you’ll never be fat!" And then the publicist reminds him about the juicer.
"Every home in America should have a juicer," Mr. LaLanne says. Then, that said, he
goes on to talk about eating out every night but Christmas and New Year’s Eve with his
wife, ELAINE.
What is your plan for the Eve? "I’m going to make love to my wife! Just so we’re
together, that’s the main thing. We’re very family oriented."
He goes on for a bit about his new Corvette and his friend Arnold Schwarzenegger. We
thank him, say goodbye, wish him the best.
We’ve got to start in the schools, he responds. "Take all the junk out of the school
lunches! Have you seen all these kids, so out of shape?"
.
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