Charles H. Dow, Father of Value Investing
It's All About the Dividends
Dow Theory: Buying in Scales
How to Avoid Losses
When Dividends are Canceled
Cyclical and Secular Markets
Inflation Proof Myth
What is Fair Value?
Issues with P-E Ratios
Beware of Gold Dividends
Gold Standard Myth
Lagging Gold Stocks?
No Sophisticated Investors
Dollar down, Gold up?
Problems with Market Share
Aim for Annualized Returns
Anatomy of Bear Market Trade
Don’t Use Stop Orders
How to Value Earnings
Low Yields, Big Gains
Set Limits, Gain More
The Fuzzy, Insane Math That's Creating So Many Billion-Dollar Tech Companies
Berkshire Hathaway Shareholder Letters
Forex Investors May Face $1 Billion Loss as Trade Site Vanishes
Why the oil price is falling
How a $600 Million Hedge Fund Disappeared
Hedge Fund Manager Who Remembers 1998 Rout Says Prepare for Pain
Swiss National Bank Starts Negative
Tice: Crash is Coming...Although
More on Edson Gould (PDF)
Schiller's CAPE ratio is wrong
Double-Digit Inflation in the 1970s (PDF)
Quick Link Archive
DOW VALUE WATCH
Dow Fair Value (50% Principle):
2014 High: 18,351.40
2009 Low: 6,469.95
Fair Value: 12,410.68
+34.10% above fair value
as of August 28, 2015
Index Additions and Deletions
Tools & Resources
Price change since August 1, 2014 recommendation of WFM:
We said the following at the time:
“Investors interested in WFM should consider a 3 step purchase plan with the first purchase at the current price with additional investments at $30 and at $24 or below. It appears that WFM has considerable price support at the $24 level.”
Gould’s Speed Resistance Lines
Gold and gold stocks continue to languish as there appears to be no catalyst to propel prices higher.
The perception of no reason for gold to increase adds to the despondency of traders and investors which compels selling. However, we’d like to point out that in spite of the conventional wisdom, the prospect of an interest rate rise is the biggest unambiguous reason for gold to increase in value. While a Fed rate increase is what everyone is waiting for, history suggests that Fed policy (government regulated) follows short-term Treasuries (market driven).
In a barely perceptible way, the chart above demonstrates that all Federal Reserve rate increases were preceded by a rise in the 3-month Treasury. The blue arrows indicate the reversal in the declining trend before 3-month Treasuries increased. From this point, we can easily see that the Federal Reserve’s discount rate follows to the upside not long after. We’ve only included the point in the interest rate cycle that corresponds to the phase that we are entering, coming from an all-time low to an eventual all-time high.
The price of gold cannot sustain a rise in the face of deflationary forces, which typically brings interest rates down. As the cycle eventually turns, we will see a sustained increase in the price of gold (with the obligatory volatility). Analysts will argue that it is not possible for the price of gold to increase in the face of rising interest rates, however, the period from 1948 to 1981 is exactly when gold had its last massive bull market (based on foreign free market price of gold from 1948-1971; U.S. price of gold from 1971-1981).
Gold Stock Indicator