In recent months I've noticed something quite similar in gold and stock market trends, and to the point that I am reminded of the old rule of thumb which says, "Seemingly range bound markets are merely markets looking for direction, that they are setting up to break out in one direction or the other."

With that in mind, this morning I looked at the charts for POG and the Dow. What I found was that gold crossed above the 1,200 level nine times in the last 5 months. Over the same period of time, the Dow crossed over the 17,800 level eleven times.

O.k., so what? Well, these facts suggest that both markets are set for strong moves, up or down.

While neither always moves in response to the other, here's what I'm thinking.

POG is off by one-third from it's high in the latter part of 2011. In the same time, the Dow has risen by two-thirds with no meaningful correction - something which is almost unprecidented in contemporary financial history.

I think this means that markets over recent months are trying to assess the future, and that they may soon break out strongly, perhaps even from the same calalyst. If so, I see POG moving strongly higher while the Dow sinks in a frighting sell off not seen since '07 (when that indices fell nearly 50 percent in the next year-and-a-half).

What does this mean for LBSR? I don't know. A failing Dow, by itself, would be bad on explorers in general, but news can make a difference, as can rising gold prices, and/or a falling dollar.

So, be careful with your bets for now, or put your (hard) money under the mattress.

VP