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Bombing The Bears

Harry Schultz GCRU snippet
Dec 12, 2005

The following snippet is from Harry Schultz' current GCRU, of Dec 7, 2005. Gold Charts R Us: sent weekly by Email: $US100/mo for 3, 6, 9, or 12-month subscription periods (fax +$120 per 3-months) - you can subscribe here.

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Welcome to GCRU #188 on Dec 7, 2005. (Into our 4th year) It's Pearl Harbor Day, but the bombing this time is on the gold bears, govts & central bankers - who are having a fit at gold's rise --which shows no fear of heights.

•••• Gold soared through major psychological resistance at $500 on relatively limited retracement. Spinner's red timing line is uptrending but nearing overbought extremes on both daily & weekly charts. But with 500 now likely to act as new price support, an overshoot towards the 520-535 area is possible. But first we need to get clear of the barrier reef, which I said lastime might range "between 495 & 507." As I write this paragraph on Tuesday AM (Dec 6), before NY opens, gold is 506 for Dec contracts, down 2.10, so we're still stuck on the reef, despite a Monday over-reach to 509.70. But this feels like we're going to wash over the reef any minute.

•••• Cell mate Paul says: "The Schultz Gold Index gained impetus via a high volume rise above a 2-1/2 month reverse H&S base that has an 18.15 theoretical upside target. Spinner lines are on verge of new positive cross above zero. All elements seem positioned for a sustained rise.

••••The XAU & HUI gold shares indexes have risen above & pulled back to test new support of their Sept highs. Up ticks in Spinner's red timing lines hints consolidation action is near to completion."

•••Our SGS Advance/Decline Line was virtually unchanged Monday, despite a 5.60 jump in bullion, ie, as many gold shares fell as rose. It continues to dither below key resistance; needs rise above 4880 (right shoulder peak of poss H&S top) to begin to reverse negative/neutral bearing & rise above 4920 to confirm. Spinner mixed with slight bullish bias.

••••• The general gold share mkt gained momentum as the middle group of stks listed last week, ie, those struggling to rise above Sept peak resistance (AEM, CCJ, RTP, & TEKT) all did so excepting NEM, which has developed a bullish inverted H&S base with 48.00 neckline. With the broader gold share mkt slowly backing up the lead dogs, this bull leg may develop significantly higher highs. Spinner action improving across the board with tentative positive hooks in red timing lines.

•••The eye opener on Monday was that though as many golds fell as rose, we had several of our shares hit new HIGHS! Eg, AEM, CCJ, FAL, FCX, TEK-T, VYE (on vol). Biggest % gains: MDG & YRI. G-T had a sharp dip.

•••• Volume is still not great. Mkts can't rise far without it. But IMO, volume will pick up soon due to TV & press talk on gold - or anything - which usually marks an overbought mkt. And the overbought bells are ringing. So, make haste, slowly. Selectivity is the floating password.

••• Bottom Line: We took some profits just below pivotal 500 resistance & used trailing profit-protecting stops on others to lock in gains thus keeping a foot in the door to ride continued strength - which proved to be a prudent strategy. With the wind clearly in gold's sails, traders can reduce profit taking to 1/3 of positions with the aim of letting profits run on the remainder, but don't be lulled into contentment. Tight trailing stops must be used (and reviewed/raised daily) to lock in any new profits as/when they develop. Personally I often take profits regardless of the chart when they reach levels I am happy with (regardless of where they may go next week). When this rally breaks, the fall is likely to be sharp & trailing stops offer the best safety net/method to exit as near to the top as possible.

•••• The 60min gold tick charts show a bearish up wedge; regard it as a possible yellow flag.

•••• Goldnami reflects a mega up price wave that has been underway for 19 days, only 6 of which were down days, for a net gain of $50, so we've been on a great roll. Continue to play it cool. Buy, stop, sell, buy, stop, sell. Cash in on the (tsu)nami. Don't let it roll U over. Ride it.

••••• Copper near its high. CRB broke out of the sideways pattern I mentioned last week. Due mostly to oil & gold.

•••The euro rose on BIG volume.

••• ALL currencies rose vs US$. C$ to new high (one of my biggest TD's). NZ$ to new multi-month high! US$ down but not for the count.

•••US T bonds in sharp fall. If down today, cancel my forecast for a tech rally to 114.

••••Oil broke out of its downtrend & downwedge, headed higher! Resistance at 64, as said before, but it'll be temp. Oil bears will be wrong for the 98th time.

••• With gold over 500, maybe our WWW [While We Wait] stocks aren't necessary, but let's not spook it by stopping them. Besides they provide useful diversification. Do U agree?

••••• Bullish downwedges in SFr & £ are intact. The currencies are telling a much bigger story than U can imagine. See next HSL for revelation on US$ future. [Editor's note: You can sign up for a free copy of HSL if you go and watch the movie, here]

•••• Goldfields (SoAfr) reports an 8% decline in gold production in Sept qrtr.

•••• As I write, gold has slipped to 505 in Dec cx, so the reef is resisting, but not for long, IMO.

•••• Let's talk in the PS.

Bye til then. Uncle Harry

PS: Gold share mkt turned around beautifully in the last 2 hours in NY on Tuesday, reversed early losses into powerful gains. It was a Hollywood ending after a gloomy start. The 3 gold indexes were all up: 2.67%, 2.75% & 2.80%. Bellwether Agnico Eagle up 5.09% on biggest volume in years. Newmont woke up, broke out to a multi-month hi, up 4.08%.

••• CCJ rose 4.68%. MDG woke up with 3.59% gain. Our favourites VYE rose 5.75% & YRI up 6.50%.

••Our Advance/Decline Line was up .33%

•••• The gold bears & gold price-fixing cartel got well & truly bombed on the eve of Pearl Harbor day.

••• What do we do now? Is the mkt overbought? Gold bullion is stretched a bit but gold shares will, IMO, outperform bullion for the days just ahead. Buying more golds is fairly safe now, since breakouts over prior resistances provide a safety cushion. We should get some pull backs but a few buys at mkt can be risked, depending on the individual chart pattern.

•••Have added new gold stock - Anglogold. See Back Burner section & Trend Investor table.

•••Gold in Europe this Wed morning opened up 2.40 at 512, so we have frosting on the cake!

•••• Currencies: Most were little changed Tues, but the powerful C$ made a new high. The A-$ was also up strongly. Euro unchanged. US$ almost unchanged at -.07%.

••• T-bonds rose 1.18% so my rally prediction is still alive.

••CRB minus 1.40.

•••• Bullish Consensus Svc calls gold overbought at 86% & subject to correction.

••• Silver's weekly chart shows a breakout with 9.50 the target. Wkly charts of natural gas also bullish. Ditto oil. The energy sector is catching fire again. This time less frantically, but solidly.

••• This is a happy PS. The gold bull mkt is reinforced. Go for it, but stay with trading rules to capture & protect profits.

Gold luck from your Uncle Harry

Gold

Goldcorp

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The following indexes, mkts & gold stocks are reviewed this week in the full edition of GCRU:

Agnico (NYSE & Tor) Anglo American (Nas) Cameco (NYSE & Tor) Coeur D'Alene (NYSE/Tor) Cvs Corp (NYSE) Eagle Plains (Toronto) Fnx Mining (AMEX & Tor) Gammon Lake (AMEX/Tor) Gold (NY) Gulfmark (NYSE) Lihir (Sydney & Nas) Manitowoc (NYSE) Meridian (NYSE & Tor) Newcrest Mng (Oz)

Newmont (NYSE & Tor) North American Gold (Tor) Novagold (AMEX & Tor) Orezone Res. (AMEX & Tor) Perseverance (Oz) Rio Tinto (NYSE) SGI - SGS (A/D line) Sierra Pac Res (NYSE) Teck Cominco (Toronto) TREND INVESTORS USD (NYBOT) Viceroy Explor. (Tor) Virginia Gold (Tor) Yamana Gold (AMEX & Tor)

All charts created with TradeStation by Omega Research 2000.

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Who is Harry Schultz? Chevalier Harry D. Schultz, KHC, KM, KCPR, KCSA, KCSS, is the highest paid investment consultant in the world at US$2,400/hour-US$3,400/hour on weekends (International Edition Guinness Book of Records 1981-2002). To keep in touch with developments around the globe, Harry draws from correspondents in many countries, plus mountains of international newspapers, magazines, and other data. At the top command posts of Harry's elite team are Chief Market Analyst, Paul Griffiths, and Research Editor/geopolitical analyst Gordon Frisch. Loyal HSL and GCRU subscribers in 90 nations are much more than simply names and addresses; Harry and his team consider them part of their cherished global family. Harry is regularly quoted in books, articles, and interviews and by other newsletters (the "alternative press"). Arthur Hailey, a longtime personal friend and HSL subscriber, based his character Lewis Dorsey in the bestseller The Moneychangers, directly on Harry Schultz. Harry has lived for extended periods in 18 nations, and shorter periods in many others. Knighted five times, Harry is a man for all seasons and a true citizen of the world. Contact: E-mail: HSLmentor@racsa.co.cr Fax: Costa Rica (506) 272-6261 Fax: Switzerland (41) 21 652 0525 Mail: POBox 622, CH-1001-Lausanne, Switzerland 2-week trial of GCRU $45 -- yes, sign me up! Copyright ©1964-2006 F.E.R.C. All Rights Reserved. Archives

Reprinted with kind permission at 321gold Inc