Precious Metals Market Timing
From the October 10th Report

Ron Rosen
Oct 14, 2005

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

"I have, for some time, been suggesting that we be very patient and don't rush into the market to buy gold shares. A periodic plan to accumulate gold coins is still a good way to acquire the metal over time. However the shares and gold bullion appear to be on the verge of a strong sell off.

Since October, 1999 the weekly gold chart has reached an extreme MACD reading on four (4) occasions. Each extreme high reading led to a sharp sell off. This past week the gold chart clearly demonstrates that a fifth extreme high reading has been reached once again. The current extreme high reading has been reached at a Delta medium # 5 high. Delta medium # 6 low is not due until mid November. Long term # 4 low is not due until February 2006. You can clearly see these Delta turning points on the gold chart below.

In addition the very long term charts of gold show that the price has reached a twenty three (23) year overhead trend line that has proven to be strong resistance."

"The precious metal shares as represented by the HUI have had difficulty making and closing at a new high over the previous high of 258. I have been writing about the correction in the HUI and stating that the supposed wave C of a "flat" type correction is not what it should be. It should contain 5 legs down to qualify as a true flat correction. I have posted an illustration of what this so called flat is probably morphing into. The "morphed" illustration shows that one more leg down may be required to complete the drawn out correction of the precious metal shares." Ron Rosen

Gold bullion has bumped its head on the 23 year overhead trend line resistance and backed off. It has further to correct but this is not the end of the precious metals bull market. If the precious metal shares have a substantial sell off, as I suspect, we will have our long awaited opportunity to buy at lower more reasonable prices. I will be initiating a hypothetical trading account for subscribers when I believe the bottom has been reached.

Once a bottom is made, the next move up should be the resumption of the gold bull market for real! I will be using the Delta turning points, and every other bit of knowledge I have acquired over the years, to produce trading profits for those of my subscribers who want to trade. For those who don't care to trade I will be warning of potential corrections. There are ways to protect your portfolios when a correction is due. This should be one "heck" of a ride. I will be recommending a number of gold and silver shares for trading purposes in addition to the gold ETF. I have been assembling the list for some time. Their past performance is of great importance. The precious metal shares have a group personality but they also have their own individual quirks. I will be writing more on this as the correction proceeds.

Every correction since the June 2002 peak, at $330.70, has bottomed below the previous monthly peak. If this process repeats, the price of gold will be going below the peak of $458.20. However for the past several months there has been an unusual amount of inflation talk taking place. Talk of inflation and rising prices of all kinds have been making business headlines, and that so called news pot is beginning to boil. Those folks who observed the gold and silver bull market of the 1970s' will remember that the most severe corrections took place when the talk about inflation and gold was newsworthy enough to be discussed on T.V. and in the newspapers. I won't predict a severe correction coming up now but we should be aware that the ground work for a severe one is in place. The use of Delta long and medium turning points will help us get thru any severe sell off. Regardless of the severity we will be some of the few folks who will know when time is just about up for whatever kind of correction we have. If the next bull phase is going to be a really big one it will probably be preceded by a "scary" sell off. A true long term bull market in the precious metals tends to perform in this fashion. Maybe it will be different this time or maybe not.

This chart of the HUI covers the entire period of the correction in the precious metal shares. It is worth noting that if the HUI has a final fifth wave down it should complete this correction. What may be of more interest is that each down wave went approximately 50 points below the 200 day moving average. If we have entered a fifth and final wave down it also may go about 50 points below the 200 day moving average. This would bring the price down to the next obvious support area of 150. If the 150 area is going to be the bottom it should produce a severe wash out. Each of the previous two waves down have been accompanied with a high MACD reading. I am not predicting a drop to the 150 area. However I believe the ingredients necessary to produce a drop to the 150 area are in place. A severe drop in the price of gold bullion does not have to take place in order for the shares to have a severe drop. The shares have an entirely different trading pattern from gold bullion. That should be obvious by now.

Newmont mining has a similar corrective pattern to the HUI. Newmonts first two down waves went approximately eight points below the 200 day moving average. If NEM has a fifth wave down, and it goes eight points below the 200 day moving average, it will be in the area of previous support. Previous support is in the 30/34 area.

This ledger will be posted at the end of each report. It will contain a continuous record of all trades for the year.

Stay Well,

Oct 12, 2005
Ron Rosen

email: rrosen5@tampabay.rr.com

Tee charts reproduced courtesy of The Delta Society International.

321gold Inc