"Woman begins by resisting a man's advances, and ends by blocking his retreat."
- Oscar Wilde
Old English law made it illegal for surgeons to dissect the body of anybody except executed murderers, thus many physicians had not the remotest idea of the body's anatomy. William Hunter was widely condemned when he opened the first English school for dissection in 1747 but, despite public protests, he and his followers set out to discover and name the parts of the human body. Earlier anatomists had already named the small projections in men's throats that seemed to move up and down as they spoke, based on folktales that a piece of the forbidden fruit had stuck in Adam's throat when the first man took his famous bite of apple in the Garden of Eden. Although undoubtedly much older, the term "Adam's Apple" first appeared in print in 1755, when William Hunter's dissectionists obviously realized that it was caused by thyroidal cartilage rather than an apple.
Our dissection of auric entymology reveals at least three remarkable and generally unnoticed events. First of all, the accompanying chart of "The Dines Gold Stock Indicator Consensus" (DIGSIC) is finally emerging from its "Buy Zone" (see chart below), flashing a bullish signal even while nearly every gold investor is gripped by the type of total pessimism typical of Bottom Formations and exemplifying why so few people buy at Bottoms. Indeed, the XAU Gold Average hit its low back on April 24th, precisely the day we sent Interim Warning Bulletin No 9 looking for golds to turn up and the XAU has edged quietly higher since then. In demoralized markets, buying interest typically begins in the blue-chips.
The second interesting dissection is that two of the four precious-metals bullions are running wild in the streets, yet have attracted virtually no attention from the financial press, partially because palladium is such a little-known metal even though it has crucial uses in cellular phones, laptop computers, and automotive catalytic converters. This is also an important insight because of Dinesism #10, The Dines Wolfpack Theory, indicating that the four precious metals tend to move together. The charts of palladium and platinum (second from bottom) show the extraordinary strength these metals have displayed this year. The mafia-controlled Russian negotiators have been promising deliveries of palladium and platinum to Japanese automakers, but none has been forthcoming all year, so this could be the biggest attempt to "corner" a metal since Bunker Hunt drove silver up to $50/oz in 1980. While the Russian export agency (ALMAZ) has yet again promised deliveries to Japanese customers this month, investors remain skeptical in view of the fact that interest rates to borrow palladium and platinum have soared to sky-high levels: normally under 3%, borrowing platinum for one month now costs leasers a whopping 60%, while one-month lease rates for palladium are a staggering 150%. The very steepness of the backwardation suggests that few believe platinum could have a sustained Major bull move, whereas we have frequently shown our long-term chart of platinum (below) having made a peak in 1980 and a subsequent low in 1985 so that we believe we are already twelve years into the next platinum bull market! Our favorite palladium blue-chip is Stillwater Mining (PGMS), and the Uptrend in its chart (below) is clear. We also added a low-priced palladium stock to Supervised List #4 in our last IWB, North - American Palladium (PDLC.F). We only know of two palladium stocks worth buying. The third interesting dissection reveals that precisely while the market is in its DIGFOI Sell Zone, golds are in their DIGSIC Buy Zone, bringing to mind Dinesism #7, The Dines Rule of Gold Countertrend (DIGROC). So we can surmise some "surprise" event that sends the market lower and golds higher, suggesting perhaps something to do with the European Monetary Union and currencies.
Our favorite gold blue-chip remains Franco-Nevada (FN.TO) and the classic Upchannel is clearly visible in the above chart. But a number of other golds are beginning to stir, tentatively at first, especially blue-chips such as Barrick, Placer, and Newmont. Also Prime Resources. If gold stocks are indeed now making Bottom Formations, strength should spread from blue-chips to mid-size golds and, finally, to the low-priced juniors that have been so savaged by the unrelated Bre-X fraud. And which are thus on the bargain counter.