Honest Money
Gold & Silver Report

Gold/HUI

Douglas V. Gnazzo
Market Wrap Week Ending 3/10/06 - snippet
Posted March 16, 2006

Last week we stated "notice the cluster of prices around the 570 level back in the beginning of February. Gold will soon have to get above this resistance level if its upward rally is to stay alive. We are not of the opinion that gold must make a new high to remain in a strong bull market; however, it must soon make up its mind, which way it goes from here."

Gold made up its mind falling over $23 dollars to 545.91 (continuous daily chart price) for a loss of over 4% for the week. Silver did a bit better loosing 2.4%.

The precious metal stocks took it on the chin with the HUI down 8.29%. The gold stocks fell nearly twice as much as the pog - suggesting that more downside action may be forthcoming.

The first four charts are from a dear friend and chartist extraordinaire. We are deeply indebted to her for a stellar contribution. Thanks Alexandra.

The above GLD/HUI ratio shows that GLD has been leading the HUI since it touched the lower regression line. As we said above - this is not a good sign. However, note that the ratio has gone back up to the upper line and appears to be beginning to reverse. If it does, and if it continues, it will be a positive divergence.

For now, we wait and watch for the outcome. First, it must reverse. Second, it needs to continue. Third, it must be determined that if it does occur - whether it is of a short term or intermediate term duration.

The above chart illustrates a head and shoulders formation. However, the index is oversold and RSI has turned up, indicating that the immediate downside price action may be changing.

Once again, it remains to be seen if the tide has turned, and whether it is of a short term or intermediate term duration.

Presently we favor a short-term bounce compared to an intermediate term trend change, as the following charts suggest...

... Read the full report on Doug's new website.

-Douglas V. Gnazzo
email: Douglas V, Gnazzo

Douglas V. Gnazzo is CEO of New England Renovation LLC, a historical restoration contractor that specializes in restoring older buildings that are vintage historic landmarks. He writes for numerous websites and his work appears both here and abroad. Just recently he was honored by being chosen as a Foundation Scholar for the Foundation for the Advancement of Monetary Education (FAME).

©2006 Douglas V. Gnazzo. All Rights Reserved.

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