Having indulged ourselves in some profit taking the next task is to try and determine just when to start buying stocks again. We will start with a look at gold, the US Dollar and the HUI.

Gold chart:

After a $100 run up gold has pulled back slightly, however the gold price still remains well above the 200dma. As we can see gold is at $735.00 and the 200dma is at $670.00. We expect this gap to diminish with gold finding a lower level. The RSI, MACD and the Stockastics were in the overbought range but have turned down and are heading towards the middle of the range.

USD chart:

The US Dollar has managed three up days to produce a small rally, which in turn has a negative effect on gold. The RSI, MACD and the Stockastics were well and truly in the oversold range however they have turned up and are heading for the neutral zone. It remains to be seen if this embattled currency can produce a significant rally. We do not have any faith in the strength of US Dollar but it must be remembered that nothing goes down in a straight line and a rally will put a cap on gold’s progress.

Hui chart:

The HUI would appear to have formed a double top, which suggests that the recent surge upwards is over for now. The RSI, MACD and the Stockastics have just started heading south.

We recently sold approximately 50% of our holdings in the following companies:

Agnico Eagle Mines Limited sold at $48.78 on 13th September
Yamana Gold Incorporated sold at $12.40 on 24th September
Kinross Gold Corporation sold at $15.36 on 24th September
Fronteer development group at $10.44 on 24th September

The other 50% of these gold mining stocks remain in our investment account and form part of our core holdings along with the other gold stocks listed in our portfolio.

Conclusion

The USD is heading north for the moment and gold is behaving inversely to it. The charts suggest to us that gold and gold stocks remain under downward pressure. We anticipate that gold will retreat to $700 possibly during the next ten days. Towards the end of October we should see the end of this pull back and gold begin a major rally through until January. As soon as we think that the re-entry point has arrived we will tell you and start buying stocks again. Until then we will watch the action and try and identify which stocks offer the possibility of greater profits.

Have a good one.

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