An E Mail I Sent To A Well Known Letter Writer

"If the S & P 500 (SPX) crashed 10% in the matter of a few days or even a few weeks (which would of course be a correction not a crash), NEM, FCX (both in SPX) and gold/silver stocks in general would also crash due to index fund traders mechanically selling the gold/silver stocks in their indexes. You're correct that the big picture is a gold Bull (since late 2000 for gold stocks) vs a major averages Bear since March 2000. The major cycles are vastly different, the minor gold/silver stock cycles are profoundly affected by SPX due to index fund trading. SPX drives the action in many indexes, so many gold/silver stocks are affected.

Some examples: Gold/silver stocks recent minor int term upcycle since 10-20-05 for HUI/XAU coincided closely with SPX's, which began about a week earlier. HUI/XAU's correction in Sept/Oct 2005 coincided closely with SPX's. In 2003 SPX rose dramatically and so did HUI/XAU. In April/May 2004 when HUI/XAU had a 6 week sharp correction it coincided closely with SPX's correction. In July 2004 HUI/XAU had another correction that coincided with SPX's. A true brief crash in SPX WILL crash gold stocks, and, even a correction will drag gold stocks down due to index fund selling. Later this year when SPX has a dramatic correction, so will HUI/XAU. Index funds are a huge factor now. Thank you."