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Gold - Taking a Well-Deserved Breather

Technical observations of RossClark@shaw.ca

Bob Hoye
Institutional Advisors
October 15, 2004

The gold market is down $10 from last week's high while the XAU & HUI indices are down 4.5%. However, there was no divergence between the bullion and the stocks at the top so we will treat this correction as the start of the anticipated pullback (not part of a topping formation). Support starts at $413, but could be as deep as $405 without violating the uptrend.

The HUI generated its upside exhaustion reading at 231.38 on September 30th and after a brief flurry (with a divergent RSI) it is now at 227.92.

I will send an interim alert once the short term oscillators generate an oversold reading on the index and include a list of stocks that exhibit strong accumulation patterns.

Silver overshot its upside projection, but the RSI(14) levels of 69 to 72 were enough to thwart the rally. The current correction should last 6 to 8 trading days (Oct 18th to 20th). If it is mild and holds at $6.70 then we can project levels approaching $8.00 on the next rally. If the break is deep it should have a lethargic bounce from $6.20. I will update the analysis this weekend.

Bob Hoye
Institutional Advisors
Website: www.institutionaladvisors.com

CHARTWORKS October 12 2004

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