 CHARTWORKS
Gold Sector in a Post-Bubble
Environment
Technical observations
of RossClark@shaw.ca
Bob Hoye
Institutional Advisors
Jul 14, 2008
We should be very close to
the period where gold stages its next significant rally. The
secular model, continued weak US Dollar, seasonality and COT
data support this conclusion.
Secular
In the past eighty years there
have been three secular bull markets in North American equities.
The gold sector declines during these periods, then puts in an
important low as the secular bull market crests (1929, 1966 &
2000), continues to rally through the post bubble high seven
years later (1937, 1973 & 2007) and then extends again as
other sectors give up ground in the eighth year (blue shading
on charts).
Gold vs US Dollar
The US Dollar continues to
stair-step its way lower. Since 2002, each rally that crossed
above the 20-week exponential moving average (or conversely
when the Euro crossed under its ema) has offered an attractive
entry point in gold and related mining stocks. Support in the
XAU and HUI is evident around the 20-week Bollinger Band during
these corrections.
Seasonality
In recent years July has offered
buying opportunities for a rally into the September- October
time frame.
COT
The GoldWorks COT model monitors
the commitment of trader's data (provided by the CFTC) for extremes
in the movement of positions of commercial and non-commercial
traders. The latest signal from the model was a buy during the
week of May 16th when commitments dropped to their lowest levels
in eight months. The indicators have since been in a neutral
position.
Jul 11, 2008
-Bob Hoye
Institutional Advisors
email: bobhoye@institutionaladvisors.com
website: www.institutionaladvisors.com
Hoye Archives
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