FUT Gold, is the game up?

["Earl Adamy" <eadamy@xxxxxxxxxx>]

I keep a simple little ratio (London PM Gold Fix / XAU) and when the ratio
hits extreme low levels (around .20) I buy gold funds and when it hits
neutral to extreme high levels (.35) , I sell. The most recent buy signals
were in late Sep 98 and late Mar 99. In each case the ratio rose sharply (as
XAU rallied sharply) hitting neutral levels within 30 days. After Friday's
12% sell-off in the XAU (after a near 30% rise), the ratio remains below the
neutral level. The general historical pattern on weekly charts has been that
once the ratio reaches extreme low levels that the ratio eventually (12+
months) approaches extreme high levels. Another interesting pattern on the
weekly charts has been the proclivity of the ratio to reach the extreme high
level shortly before a major correction in the equities market. Finally, the
XAU tends to lead the price of gold.

Now comes the Bank of England telling the world they are liquidating their
gold and gold futures tank falling to a 78.6% retracement of the recent
rally before recovering modestly. So is the game up? I don't think so. Any
other opinions?

Earl