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Gold is OK

Richard Russell snippet
Dow Theory Letters
July 30, 2004

Extracted from the July 29, 2004 edition of Richard's Remarks

A rising dollar puts pressure on gold, and this morning saw gold down 1.50 to 387.50 - but as the dollar reversed to the downside gold reversed to the upside.

Since many subscribers are worried about gold, I turned to my faithful 20-month and 40-month moving averages of gold. Here's the story. Both of these very long-term moving averages are bullishly rising. The primary or 40-month moving average of gold stands at 332.50. The 20-month moving average of gold is far above the 40-month MA and stands at 374.20.

In April of this year gold surged to 432. In April the 20-month MA stood at 366.90. That put gold 18 percent above its 20-month MA, which is too much. The result has been the current period of backing off and consolidation. But all this is occurring well above the rising 20-month moving average for gold.

Russell conclusion -- Gold is OK. The bull market in gold is intact.

By the way, I find short-term analysis of gold very difficult and often deceptive. The reason is that gold is probably the most "emotional" of all tradeable items. Everybody has an opinion about gold, and the opinions are usually quite "strong." As a result, I'd much rather depend on my very long-term studies, as sited above.

Richard Russell
Dow Theory Letters

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