Category Archives: Barron’s Gold Mining Index

E. George Schaefer is most synonymous with Dow Theory and its modern application.  However, E. George Schaefer was also known for his work in the selection and timing of gold and silver stocks.  As a bit of background on E. George Schaefer, in 1960, he wrote a book titled How I Helped 10,000 Investors to Profit in Stocks.

The book was about Dow Theory and its application.   According to Richard Russell:

“…Schaefer started his ‘Dow Theory Trader’ service in 1948.  this analyst possesses a ‘feel’ for the market and an instinct for the big picture second to none.  He is one of the very, very few men who fully comprehend the concept of the primary trend.  A warning: if you have ever heard Schaefer speak, do not be fooled by his ‘hoosier-country boy’ style of delivery.  For Schaefer has been way ahead of the city boys on Wall Street for a long time.

“Schaefer provided his readers with many important technical studies during the late 1940’s and early 1950’s, and he has always labeled himself a ‘modern Dow Theorist.’ Schaefer has combined many technical considerations with his reading of the Averages, and I have found his thinking along these lines to be sound.

“In my library is a copy of Schaefer’s June 18, 1949 report, in which he predicted a major new bull market.  His reasoning was brilliant, and if he had never written anything else, he would rate a ‘superb’ on this one alone.  Personally, I wish that Schaefer had continued with his earlier technical studies, but those were written when the technical approach (and, in fact, almost any approach) was rare, and it is possible that he is now a bit tired of the ‘teaching’ approach which was a feature of his earlier letters.”

Our personal favorite by E. George Schaefer was a Barron’s article dated June 22, 1959 titled “Final Bullish Upsurge In Many Stocks Just Starting?” This article stands as a lone beacon for how modern Dow Theorists can understand the distinction between a bull and bear market as part of the primary trend.  We note that at the time, Richard Russell was of the view that the stock market was due for a bear market and called a bear market in 1961.  Schaefer was sticking to his 1959 call and told investors to hold onto their positions which was rewarded with another +40% increase in the Dow Jones Industrial Average.

Schaefer and Gold Stocks

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