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Tuesday
Mar062007
GOLD: Is this correction over?
The chartists would point out that the technical indicators suggest that we are at or near the bottom of this current correction.
It is an interesting chart that clearly shows that the worldwide sell off has taken gold down with it. The RSI is now close to 30, the MACD is heading south and the Stockastics are in the buy zone. So we think that we are almost there, however it would not surprise us if gold hit the 200-Day Moving Average before stabilising. This 200DMA average is hovering around the $625.00 level, so that is as far as we think it will go, if it does not turn up before then. It should be noted that gold has penetrated this average in the past but those penetrations have not been deep and have not lasted for very long.
This correction we view as a good thing for gold as it offers a terrific entry level for those who have yet to realise that the markets are overbought and the currencies are being diluted by the printing presses on a daily basis.
We are sticking with our investment in the gold stocks that we already hold, as we believe that these will outperform the market going forward. There are a couple of what we think are exciting plays coming into view as this shakeout has brought a dose of reality to some of the junior explorers. In a few days or so we think that the time could well be right to put some of our money into these stocks. But for now we will watch this shakeout work its way out of the markets and hopefully pounce on a couple of bargains.
Taking a quick look at the Industrials chart we think that there may well be a reasonable ‘bounce’ from here but we certainly would not want to hold any of these stocks at this point in time.
05 March 2007
It is an interesting chart that clearly shows that the worldwide sell off has taken gold down with it. The RSI is now close to 30, the MACD is heading south and the Stockastics are in the buy zone. So we think that we are almost there, however it would not surprise us if gold hit the 200-Day Moving Average before stabilising. This 200DMA average is hovering around the $625.00 level, so that is as far as we think it will go, if it does not turn up before then. It should be noted that gold has penetrated this average in the past but those penetrations have not been deep and have not lasted for very long.
This correction we view as a good thing for gold as it offers a terrific entry level for those who have yet to realise that the markets are overbought and the currencies are being diluted by the printing presses on a daily basis.
We are sticking with our investment in the gold stocks that we already hold, as we believe that these will outperform the market going forward. There are a couple of what we think are exciting plays coming into view as this shakeout has brought a dose of reality to some of the junior explorers. In a few days or so we think that the time could well be right to put some of our money into these stocks. But for now we will watch this shakeout work its way out of the markets and hopefully pounce on a couple of bargains.
Taking a quick look at the Industrials chart we think that there may well be a reasonable ‘bounce’ from here but we certainly would not want to hold any of these stocks at this point in time.
05 March 2007
in 
Gold
Gold
Reader Comments (3)
This from an avid and appreciative reader:
Just trying to help out. You often (maybe always) spell it STOKASTICS. Look it up, but I think that should be STOCHASTICS with CH instead of K.
For the insight you impart THANKS A BILLION, as they now say on Wall Street.
William Behrens Calgary Canada
Hey Guys,
Great website and very informative materials on the gold sector. I have forward your website to all my investor friends, they all read your website too on the gold trade.
Thanks,
Owen
Thanks team, as always your comments are spot on and very much appreciated.