Precious Metals Market Timing
Special Report

Ron Rosen
Sep 23, 2005

"Time is more important than price; when time is up price will reverse." W.D. Gann

One of the more difficult lessons to learn is patience. Today we have had a demonstration of just how important patience can be. I thought it would be best to start this report the way I usually end it. The HUI did not confirm the new highs in bullion. Thus our requiring that they both confirm new highs before we enter was a wise decision.

The paragraphs quoted below are from the September 14th report.

"There is something unusual going on with this long term bull market in gold and the precious metal shares. When this bull market started, the shares bottomed first and started up first. The shares, as represented by the HUI index of unhedged shares, bottomed and started up in December 2000 at 35. Gold bullion bottomed and started up four months later. The gold bottom was made in April 2001 at $255.80. This indicated that the shares were performing their usual task of leading the way.

The shares also topped before Gold bullion and warned us of a coming top in the bullion. Bullion made a top in April 2004 at $433. It then corrected. The next and last high on the continuation contract was $458.20 in December 2004.

If bullion makes a new high before the HUI they will have changed places and gold bullion will be the leader. I find it peculiar for them to change places at this point in time. It is not only peculiar; it is unusual and sends up a warning signal to me. Because of this, I am going to wait before I recommend entering this market until they both make new highs. Once both the precious metal shares and gold bullion have made new highs for this bull market, I believe we will be off and running. We obviously will have paid higher prices and will have missed the bottom. I have been writing about missing the bottom for some time and have simultaneously said that we must have the evidence that a bottom has been made before we enter or reenter. What will it have cost us by waiting for the evidence that the bull market has resumed? We will have paid high prices for the shares, perhaps the highest, but we will know that the bottom is in, and we won't have to go through the anxiety of worrying about a further serious drop."

The failure of the HUI to confirm the new high in gold bullion remains in place. Both bullion and the HUI may start down with a vengeance. If they do, then we can say that the gold shares did warn us of a coming decline in the precious metals complex. They will then have performed their usual most helpful service. They sure took their time in performing their service this time around. We can't be certain that a decline is developing but we do know as of this point in time there is a non confirmation of gold bullions high. That non confirmation of the new high in gold is the refusal of the HUI to make a new closing high above 258.

The charts posted below demonstrate the failure and the non confirmation. Of course the saying, "It aint over till it's over" applies until the failure becomes obvious. A one day non confirmation is not sufficient but is significant.

Gold bullion has made a series of new highs for the move but has failed to breach the 23 year declining trend line. The parallel channel is still intact.

It appears that gold has made a top at Delta Medium # 5. If so gold is headed down to Delta Medium # 6 which is due on November 9th with a range out to November 23rd.

The dollar index has made a low at Delta Long Term Low # 12 and is headed up to Long Term Delta # 13 high. Long Term Delta # 13 is due January 18, 2006.

Silver has underperformed gold and is headed down to Long Term Delta # 4.

Delta Long Term # 4 is due in February, 2006.

The HUI has failed to make a new high and has failed to exceed the second peak. This is a non confirmation of the highs in gold bullion. It also confirms the fact that the 23 year down trend for gold bullion is still intact. The gold shares are doing what they usually do in fine fashion. So far they have let us know that we are witnessing a failure of this gold rally. However it remains to be seen if this is a one day wonder. I think it is for real and the Delta Turning Points have once again demonstrated their importance to our understanding of market movements.

The Gann 30 year Master cycle also remains on schedule. The wave counting is another story. It is not a tool for predicting market movements. It is a tool for identifying completed moves. However for whatever reasons those of us that dabble with wave counting try to use it as predictive instrument. When doing so we had best be willing to change our wave count when it is obviously proven wrong. Ralph Nelson Elliott himself said it is best used to identify completed moves. He then used it as a predictive tool. So be it.

Stay Well,

Sep 22, 2005
Ron Rosen

email: rrosen5@tampabay.rr.com

Tee charts reproduced courtesy of The Delta Society International.

321gold Inc