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Is the worst over for gold?

Richard Russell
Dow Theory Letters
April 23, 2004

Extracted from the April 22, 2004 edition of Richard's Remarks

I include below a daily chart of gold going back three years. What I want to show here is that over and over again gold has declined to test its 200-day moving average. In April 2003 gold actually broke temporarily below its 200-day moving average -- and then recovered.

So the story of gold is one of very erratic action with periodic scare-declines back to the 200-day moving average and then a rise to new highs. Gold's erratic action is understandable when you consider that the world "central bank establishment" will always do all it can to discourage people from buying and holding gold. The latest ploy is a threat from the Bank of France that is "considering" selling some of its gold.

Back in 1979 even as gold was surging towards a top at over 800, the action was enough to give a gold-holder a heart attack. Wild swings up and down were the order of the day, but after each swoon gold continued higher.

In that gold bull market I started buying coins in the early 1970s at $75 an Eagle. As the gold bull market roared up in 1979 I was goggle-eyed at the "crazy action," and I finally sold out at $660. I had had enough.

Gold then climbed to 850 without me. The wild action had taken its toll on my sleep. With gold at 660, I decided that I needed a rest.

Gold is bouncing around its 200-day moving average and up .60 in the aftermarket. Silver up .10 in the aftermarket. Is the worst over for gold -- too early to tell, but the 200-day MA has halted gold declines many times before.

Richard Russell
Dow Theory Letters

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