Charts are log, traced from Stockcharts
Surely, I hear you say, there is nothing more to be said about Gold? How many charts do we need to convince us we are in a bull market? Well, judging by the wall of worry on the Gold Eagle Forum - one or two more...
No serious observer of the PM market disputes the existence of a nascent long-term bull in gold, and especially silver. What the PM gang want to know now, though, is - will gold (and PM shares) pull back to the $360 level as predicted by the 4-month cycle, or has some other factor come into play? Or to put it another way - can we sell some PM shares now and buy them back cheaper in 3-4 weeks time? Or are we about to experience a further appreciation in the PM complex? Esteemed commentators have posted opinions, and even they seem unable to agree. Fools rush in....here's my 2 pence worth on the subject.
I hope you like the winter theme to the first series of charts - more seasonal than the uncharacteristic T-shirt weather we have had here in the UK recently. (What a summer and autumn! If this is global warming - give us more!)
Short term - Here is the prosecution case for gold:
1) Bearish rising pennant.
2) The 4 month 'Tic Toc' cycle is not due to bottom until the end of November.
Here is my case for the defence:
1) The HUI share index shows every sign of rising further
2) The HUI has not yet reached the blow-off stage as adjudged by my analysis of wave-top formations
3) The HUI has not reached either of my year-end targets of 275 and 350
Not much of a case at all then - I hear you say - if the HUI corrects suddenly, I am toast as a T.A.! O.K. I will try to make the case for Gold based on its own merits. In lieu of a deerstalker I put my Baseball cap on back to front and launch into...
THE CASE OF THE MISSING ARROWS
Observe the above chart. 3 triangles are drawn. The first two broke out to the upside. Why should the third be any different? Because it is pointing up (bearish). But if we are in an accelerating rising market - is this not just to be expected? I call to the witness box the supersonic passenger jet (retd.) Concorde. Do you not follow just this flight path during take off? (Ans. YES M'Lud.)
The three flags have been bisected to form symmetrical arrows - one of my favourite forms as it happens. The shafts of the arrows do seem to mark out important support/resistance. Interesting, no? To the bottom right of the chart the arrows' vectors have been grouped as - well - arrows. You could say there was a progression - but there seems to be a stage missing. I have bridged the gap with a speculative dotted arrow.
Case adjourned while the Gold Detective goes off in search of further evidence....
Not for the first time this week is a clock running backwards on a chart of mine! First off, the 'missing link' - now shown in red - turned out to be from a symmetrical triangle from whence this latest assault on $400 was launched. Note that the shaft runs back off the chart. Note also that another, more familiar symmetrical triangle overlays this one (shown in green) with a vector parallel to the second triangle identified in the previous chart. Now the pattern becomes clearer - a series of ascending arrows, the first three of which have launched to the upside. I now added in a fifth vector in this evenly spaced rotational sequence - shown in blue. I did not have to look far to find the corresponding arrow on the chart....
I rest my case for post- $400 gold, probably NEXT WEEK!
From lines derived from the above chart, I have produced my final version of Stockcharts daily continuous contract gold 15/11/2003. In it you will find......
Let us hope our 'Merry Christmas' in PMs is not at others' expense....
P.S. The Rand's strength has been holding back the SA shares. Is this pennant bearish for the Rand (and consequently bullish for DROOY etc.)? We will see....
MERRY CHRISTMAS FROM RODIN
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Webmaster RODIN
18 November 2003
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