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Four Decades. . .
Four Upside Targets from Similar Consolidations

Technical observations of

Bob Hoye
Institutional Advisors
Dec 15, 2005

The gold price achieved its minimum measured target of $526 as of December 9th. This calculation was based upon the measurements from the consolidation of December 2004 through the breakout in September 2005. This is now the fourth consecutive decade that has produced a 7 to 8 month consolidation of similar structure followed by a breakout, minor pullback to the breakout and then a headline generating rally to a measured target. The degree of strength suggests that a quick pullback here will likely be followed by further upside progress in the coming weeks.

Gold and Newmont Mining

Upside Exhaustion

The red dots on the preceding charts identify points of upside exhaustion alerts resulting from the simultaneous overbought readings in the summation index and exhaustion index. This only happens when there is a dominant uptrend that accelerates to a point of persistent daily panic buying. The signals of the past three days are the first daily exhaustion alerts since 1992.

Typical action in gold following an exhaustion alert is for the price to make a quick pullback to a 12-day moving average and then move to a marginally higher high (2% to 4%). If the current action follows this pattern, topping out at $526 (on a closing basis), then we can anticipate a pullback to $510 should be followed by a rally peaking out in the $540 to $550 range. However, the next sustainable rise could be deferred until the daily RSI(14) has slipped 35 to 40 points.

The XAU (122.98) and HUI (260.97) indices should be capable of exceeding the current highs by as much as 5% over the next month. Based upon current data this equates to target in the XAU at 133 and the HUI at 285.

Bob Hoye
Institutional Advisors

DECEMBER 13, 2005

Hoye Archives

The opinions in this report are solely those of the author. The information herein was obtained from various sources; however we do not guarantee its accuracy or completeness. This research report is prepared for general circulation and is circulated for general information only. It does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. Investors should seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized.

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