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Gold's Infallible Indicator - Six Months Later

By James Turk      Printer Friendly Version
Nov 7 2007 12:19PM

www.goldmoney.com

Exactly six months ago I wrote about an indicator that has predicted with 100% accuracy when the price of gold was about to rise. The entire article can be read here: http://www.kitco.com/commentary/old/Turk/turk_may072007.htm

Over the years, this indicator has been one of my favorites.  It has been so good that I call it “gold’s infallible indicator?. True to form, this indicator is still scoring 100%. 

The indicator is very simple. It is based on articles about gold in The Economist magazine. As I wrote six months ago: “The Economist rarely writes about gold, but when it does, start buying. It has an uncanny knack for publishing unswervingly bearish articles on gold just before the price heads higher.? 

The last article about gold by The Economist appeared on April 8th, when gold was trading at $674.20. As of yesterday’s close, gold has risen 21.7% so far – I say “so far? for a reason. Gold’s uptrend remains intact, and no one knows when this uptrend will end. So further gains in gold are entirely possible. Here is this indicator’s record. 

Date Article is Published

Gold Price
On Date of Publication

Low Gold Price After Date of Publication

% Decline to Low Price
After Date of
Publication

Subsequent High in the Gold Price

Date of Subsequent High in the Gold Price

% Gain from Publication Price to High Price

23 Jan 1993

$328.60

$326.30

0.7%

$407.00

30 Jul 1993

23.9%

11 Sep 2003

$379.70

$369.20

2.8%

$426.40

9 Jan 2004

12.3%

1 Dec 2005

$502.50

$493.00

1.9%

$719.80

11 May 2007

43.2%

8 Apr 2007

$674.20

$641.70

4.8%

$820.80
(so far)

6 Nov 2007
(so far)

21.7%

I happen to believe that The Economist publishes some high quality material. So why is it always wrong about gold? As I note in my article six months ago: “While The Economist pretends to offer serious analysis of gold, in reality it doesn’t.  It has another objective – anti-gold propaganda.? To be blunt, The Economist is a tool of the gold cartel, the activities of which are well documented by the Gold-Anti Trust Action Committee. GATA’s research is available for free at (www.GATA.org)

The gold cartel has one primary objective – to make the dollar look worthy of being the world’s reserve currency. We all of course know that the dollar is not worthy of that esteemed title, but that doesn’t stop the gold cartel.

One way they pursue their objective is to intervene in the gold market to keep its price low. Gold and the dollar are major competitors; they compete for holders. A low gold price makes people believe that all is well with the dollar. But the gold cartel also uses other means to pursue its nefarious goal, one of which is disinformation. 

The gold cartel knows as well as you and I that not only is gold money, it is the most powerful money of all because its value is not based upon someone’s promise. Gold has no counter-party risk. So it is only with reluctance that the gold cartel dishoards metal from central bank vaults. They know that once that gold is sold into the market, they are unlikely to ever get it back at current prices.  It is therefore less costly for them to just disparage gold. By doing so, they hope to keep you from buying it, thereby lessening its demand.

So from time to time, the gold cartel enlists anti-gold publications that favor fractional reserve banking, fiat national currency, and managed money through the central banking elite. The Economist is all of those, with the result that it sits at the top of the gold cartel’s list of friendly rags. When the gold cartel is losing control, they invariably turn to The Economist, which then dutifully spins out some disparaging piece on gold, but to no avail. Eventually the market always overwhelms government price controls. It is an unalterable reality that price controls always fail eventually, even government price controls on gold.

So my conclusion is the same as the one I wrote about six months ago. “When reading about gold in The Economist, do it with a jaundiced eye, understanding that its foremost objective is to disparage gold. More importantly, when this infallible indicator flashes a buy signal, start buying.?

James Turk

 

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James Turk is the founder of GoldMoney www.goldmoney.com and the co-author of The Coming Collapse of the Dollar www.dollarcollapse.com.

Copyright © 2007 by James Turk.  All rights reserved.