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Gold: The Battleground

Richard Russell Snippet
Dow Theory Letters
Feb 24, 2004

This snippet was extracted from the Feb 23, 2004 issue of Richard's Remarks

...Next, a few words about gold.

The chart below suggests that gold advanced too far above its 200-day moving average (red line) and is now in the process of correcting. The histograms (blue columns) at the bottom of the chart are fading (turning lower), telling me that the pressure on gold is to the downside.

In very strong bull markets, extended sideway movements can substitute for corrections. It's clear that the 400 level is a battleground between gold bulls and gold bears.

If gold over the coming weeks (months?) can hold at or near 400 I would consider it a bullish accomplishment. In the meantime, gold has broken below its 50-day moving average but is holding above its 200-day MA, which today stands at 381. As a rule, a 200-day MA will offer support in a bull market. Thus, the best I expect is gold to hold around the current area while its 200-day MA climbs slowly higher.

Below, gold and silver "cheapies" still doing OK (they went too far too fast) and now they're correcting.

More follows for subscribers . . .

Richard Russell
Dow Theory Letters

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