GOLD

It's been a bummer of a week. Probably a good thing it was only 4 trading days long. A decisive break below that $430 support left no doubt that we have at least a short term bear in progress. With the short term moving average line in a steep dive and the price momentum in deep negative territory, all this bodes ill for the market. Worst of all that volume I had been looking for to confirm an up trend has arrived but on the down side. Lastly, the short term point & figure chart is well into its down trend with a projection not that far away, at $420. I guess I should mention that short term Merv's FAN Principle brought to your attention a couple of weeks ago. It broke through the third FAN for a short term bull confirmation in the first week of March but didn't go far. It has now moved back below the third FAN trend line to negate that bull confirmation. Everything on the short term is bearish. Looking at a more aggressive indicator for a possible hint of a bottom, the Stochastic Oscillator is deep in oversold territory but has not yet started any kind of a reversal. The trend is not your friend for now.

As for the intermediate, here too all does not look good. The price is now below a negative sloping moving average line, the price momentum is negative and pointing lower and the volume action is not what I would like. In addition, the price has once more moved below its FAN trend line confirming an intermediate term bear. The trend is bearish but watch that intermediate term support, now at the $415 level. $410 would be a real bust, see the intermediate term P&F chart this week.

The only hold out from the bearish camp at this time are the long term indicators. Looking at a daily chart (rather than a weekly on which the tables are based upon) I get a long term moving average that is just starting to turn down, but oh so barely. The price is below the moving average so these two indicators are negative. Momentum is still just a hair inside the positive but not by much. My volume indicator has not yet moved below its long term moving average line so it can be classified as still positive. BUT most important, my long term point and figure chart, which filters out a lot of nuisance minor activity, is still a long way from turning negative. For now, I go with the P&F and remain bullish on the long term, realizing that all is now not that bright anymore.

U.S. Dollar Index

For some time now as went gold, so did not the US$. It seems to go in the opposite direction. Now, many might say that is the way it is suppose to go but those that count on it will sooner or later get a real shock, but not these days.

The US$ is heading higher as gold is heading lower. Short and intermediate term indicators are all positive for now. It's next test will come at that previous Feb top at $0.855. As for the long term, looking at the long term point and figure chart, we could have a trend reversal on a move to $0.86 but that would only project to $0.93 and not much of a long term move. However, should it reach $0.93, that MIGHT trigger a second projection to at least the $1.09 level which would be a decent move. One thing at a time. First, that $0.86 level.

Gold Indices and Stocks

All of the various Gold Indices took a dive during the week. The least dive was the Merv's Gamb-Gold Index, but that Index took its dive the past couple of weeks and was due for a slow down. As for the % of gold and silver stocks that can be considered bullish or bearish, well out of my Merv's Gold & Silver 160 Index universe a good 56% are bearish on the intermediate term while 57% are bearish on the long term. Short term has 83% bearish. Now we know not all gold stocks move in concert, that is why I have my Qual, Spec and Gamb Indices. From my Qual-Gold Index, 100% are bearish on the short term, 80% bearish on the intermediate term and although only 38% are bearish on the long term, no more that 48% are bullish. As for the Gamb-Gold Index, 67% are bearish on the short term, 35% bearish on the intermediate term and only 15% bearish on the long term. This is the only group still with a long term bullish rating at 75%. So, from this, one might gather that investing is not what one should be doing in gold stocks. Only the GAMBLERS might be in this market.

Reading the Info table

The intermediate and long term technical information table provides the latest weighted moving average (MA), price momentum (MOM), relative strength (RS) and an overall technical rating (RATE) of each component. A + or - symbol is provided to indicate if the indicator is gaining strength or losing strength.

Mervyn Burak, CMT
Hudson Aero/Systems Inc.
Technical Information Group

merv.burak@hudsonaero.com

28 March 2005

During the day Merv. practices his engineering profession as a Consulting Aerospace Engineer. Once the sun goes down and night descends upon the earth Merv. dons his other hat as a Chartered Market Technician (CMT) and tries to decipher what's going on in the securities markets. As an underground surveyor in the gold mines of Canada's Northwest Territories in his youth, Merv. has a soft spot for the gold industry and has developed several Gold Indices reflecting different aspects of the industry. As a basically lazy individual Merv's driving focus is to KEEP IT SIMPLE.

Although not normally available to the public, to obtain a copy of the latest weekly technical information on the component stocks of the various Merv's Gold indices, e-mail a request mentioning this Gold-Eagle offer. PLEASE provide at least your full name and home town.