Once Again, Stocks Not as Good as Gold

As major stock proxies battled around headline-grabbing levels of Dow 8000 and Nasdaq 1300 Tuesday, gold soared to yet-another new high in its now 2-year-old bull market.

The yellow metal jumped $8.30 or 2.2%, to $379.90 per ounce, its highest close since November 1996 and its biggest one-day gain since Aug. 7.

Gold was aided by anticipation of Secretary of State Colin Powell's planned address before the U.N. Security Council tomorrow, and rising tensions between the U.S. and North Korea. Conversely, those geopolitical developments pressured the dollar and stocks. The U.S. Dollar Index fell 0.87 to 99.03, wiping out modest gains in the past few trading days and closing at its lowest level since August 1999.

Although they bounced from midmorning lows, major averages also were hit by negative corporate news from American International Group (AIG), Alcatel (ALA) and Genzyme (GENZ), as reported earlier.

After trading as low as 7935.12, the Dow Jones Industrial Average closed down 1.2% to 8013.01. The S&P 500 lost 1.4% to 848.18, vs. its earlier low of 840.19, and the Nasdaq Composite fell 1.3% to 1306, up from its nadir of 1292.20.

The price of the benchmark 10-year Treasury note rose 16/32 to 100 18/32, its yield falling to 3.93%.

Metal Madness

Gold's latest rise indicates recent purveyors of the "gold is topping" theory were panning in the wrong river. But none of the toppers cited here recently were tossing in the proverbial towel on Tuesday.

"Even if the bulls are correct on a larger trend, you'll still get some correction here," said Steve Hochberg, co-editor of The Elliot Wave Financial Forecast. "We're very extended in terms of price and sentiment."

On the sentiment front, I can confirm that hard-core "gold bugs" have been proud as peacocks lately and loud as a swarm of locusts. Meanwhile, www.WhisperNumber.com is now including gold sentiment among its offering, another sign of the sector's heightened visibility among momentum types. Finally, several gold producers have accessed the capital markets with secondary offerings and/or planned other financings lately, something few other groups can manage.