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Gold - Conclusion of Pi Cycle Pressure

Technical observations of

Bob Hoye
Institutional Advisors
March 13, 2006
written on Mar 9

Gold and related mining shares were anticipated to come under pressure following the pi cycle date of January 29th. The initial decline into February 14th produced a premature oversold reading and the subsequent rally into the end of the month generated enough bearish divergence to signal a further decline. Today's action has produced a suitable oversold reading of -165 in the CCI(8) oscillator, identifying the end of this bearish phase. (The target was around -150.)

Independently, the XAU low of 124.27 is also approaching the measured downside target of 122. The initial rally should find resistance around 137.

With gold bullion now producing an oversold post pi cycle reading, it is appropriate to once again begin accumulating gold mining shares. Since 1971 there have been thirty signals that satisfied this buying technique. In the XAU, 50% of the signals produced immediate upside action with no offside closes in the next few weeks. In the remaining instances the maximum exposure occurred within the first six weeks of the oversold signal. In twenty-three instances, the risk was 0 to 5%. Only two occurrences experienced risk over 10%.

The treasury yield curve is attempting to reverse to steepening. Often this has anticipated a gold rally by a few weeks.

Bob Hoye
Institutional Advisors


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