V.14:10 (441-449): SIDEBAR: The K-Ratio Precious Metals Switch Fund
Product Description
In the July 1996 STOCKS & COMMODITIES, Jay Kaeppel described a technique for evaluating gold stocks using
the Barron's Gold Mining Index (GMI) relative to gold bullion. He showed that analysis of the ratio between the
GMI and the price of gold bullion could establish favorable and unfavorable outlooks for the direction of gold stocks
and gold bullion. Nelson Freeburg modified Kaeppel's method, which he referred to as the K-ratio, and developed
a trading system for the gold stock's group. The following discussion details Freeburg's precious metals switch fund
system.
The first step in the trading system is to calculate the K-ratio. The K-ratio is the GMI, found on the "Commodities and Financial Futures" page in Barron's , divided by the price of gold. The specific price is the Handy & Harmon quote listed on Barron's "Market Laboratory Economic Indicators" page. This ratio is used as the key indicator for the trading system, which is actually a dual band model.
The first step in the trading system is to calculate the K-ratio. The K-ratio is the GMI, found on the "Commodities and Financial Futures" page in Barron's , divided by the price of gold. The specific price is the Handy & Harmon quote listed on Barron's "Market Laboratory Economic Indicators" page. This ratio is used as the key indicator for the trading system, which is actually a dual band model.
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