Safehaven | A Fractal Shift Down Of Both Commodity Stocks And Physical Gold Occurred On 9-8-2006

September 12, 2006

A Fractal Shift Down Of Both Commodity Stocks And Physical Gold Occurred On 9-8-2006
by Jan Allen

The Facts

On 9-8-2006, the weekly chart of the Morgan Stanley Commodities Index announced a Fractal Shift Down in the stock value of commodity related companies, specifically: oil and gas producers, oilfield services, oilfield equipment manufacturers, non-ferrous metal miners, precious metal producers, agriculture producers and forest product companies: the 9-8-2006 Index showed a drop in value to $563.

On 9-11-2006, the 9-5-2006 to 9-11-2006 chart of the Morgan Stanley Commodities Index showed a drop in price to $540.

The symbols for the Morgan Stanley Commodities Index are $CRX.X and ^CRX.

For clarity, it is important to note that the Morgan Stanley Commodities Index is comprised of stocks and not physical commodities.

Now, for the physical commodity gold: it too experienced a Fractal Shift Down. Gold prices were as follows:
9-5   630
9-6   640
9-7   620
9-8   610
9-11 590

The Commentary

In this commentary it is very important to keep the concept of commodity related companies and the price of the physical commodity gold separate in one's mind.

A. Commodity related companies:
The Fractal Shift Down in commodity related companies prices is the precursor to a wider financial stock and bond market price decline as the Financial Markets Have Topped Out and are now headed lower as can be seen in the double market top-out of the S&P 100.

B. The physical commodity gold:
The Fractal Shift Down in the physical commodity gold was something I presented in my article Gold May Fall to $570 and Even $540 Before It Soars Again to Over $800.

In spite of the physical commodity gold having fallen and in spite of the risk of it falling to $570 and $540, there is a greater risk, that being, an awesome decline in the value of the dollar in as much as The Security And Prosperity Partnership (SPP) Places One's Life Savings At Great Risk.

C. One day soon, stock prices are really going to tumble while the price of gold will soar:
Yes, there is coming a national and even a continental wide emergency; when it happens, the value of the US Dollar, stocks and bonds will fall precipitously within days, even more than the Morgan Stanley Commodities Index price fell in the 9-5-2006 to 9-11-2006 timeframe. At that time, the price of the physical commodity gold will soar because the SPP introduces such a tremendous shift in the nature of government and commerce.

Therefore, there is wisdom in buying the physical commodity gold at the $590 to $570 price.

Consider liquidating all fiat financial investments immediately, these include bonds, stocks, mutual funds and non gold based ETFs; and invest in physical gold.

If one has less than $2,000, one can invest in the ETF GLD where they physically maintain the gold, but this carries risk as it is not a real asset.

If one has more than $2,000, one can buy, store and sell gold at Bullionvault.com. The advantage of this service is that one personally owns the commodity where it is guarded by Brinks, a global leader in security.

Jan Allen
Prospering Bear

Jan Allen is an analyst and journalist with Prospering Bear, a website providing thoughtful information on how to prosper in the coming Bear financial market
http://my.opera.com/prosperingbear/blog/.