 ChartWorks
Dollar Index, Gold &
Gold Shares
Technical observations of RossClark@shaw.ca
Bob Hoye
Institutional Advisors
October 27, 2004
- As with the test of speculative
spikes in the various hot games, the dollar is now testing the
lows of earlier in the year.
.
- The decline of 9 consecutive
trading days in the dollar index is extreme. This could stabilize,
do a little rebound, from which the test of this panic would
be critical.
.
- The panic low in January was
84.5 and the most recent downside target is 83.6. The action
is effectively in the target range.
.
- Naturally, gold has been doing
the goldbugs' rally.
.
- Within this is the interesting
action with base metal prices falling in the face of dollar weakness.
- Today this has been joined
by crude oil and natural gas.
.
- The most constructive part
of all of this is that gold's real price has been improving.
Our gold/commodities index has improved from 199 on October 11
to 215 on Friday (it is up today). With this, our commodity index
has slipped from 212 to 198.
.
- The chart of the dollar index
compared to the model (Cisco) follows.
XAU
& HUI
Precious metals stocks as represented
by the XAU and HUI are starting this week on a better note. Both
gold and the indices have managed to surpass the October 8th
high.
___________________________________________________________  SCHEMATIC ON RANKING
SYSTEM
1a
- early basing,1 - basing, 1b - late basing phase
2a - breaking out, 2 - steady advance, 2b - late advancing phase
3a - early distribution, 3 - failing highs, 3b - rolling over
4a - signs of weakness, 4 - persistent selling, 4b Each great financial boom has
been followed by a long bull market in gold's real price such
that the producers are eventually accepted as a premier growth
industry. Relative to commodities, gold suffered a cyclical correction
to (on our index) 183 in March. This recovered to 220 on September
10, from which it corrected to 199 on October 11. So far, it
has recovered to 215.
Of interest is that the technical ranking of the ChartWorks selected
list of gold stocks places them from basing to early in a bull
market.
Bob Hoye
Institutional Advisors
E-mail bobhoye@institutionaladvisors.com
Website: www.institutionaladvisors.com
CHARTWORKS #3 OCTOBER 25, 2004
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