At the beginning of the week it looked like we were going to have a real rally but by the end of the week it appears to have stalled. Again, my concern continues to be the lack of increased volume on upside moves. Oh yes, there is a slight increase but this can be attributed to just normal investor reaction. They are conditioned to buy on up moves and sit on the sidelines during down moves. The volume activity I am looking for on up moves would be in excess to this normal increase and that has not yet arrived.

On the long term I have no reason to change my prognosis from that of last week. I remain bullish on the long term. As for the intermediate term, that is starting to get more difficult. Last week things were bearish, this week improvement has entered the picture. We have gold just above its intermediate term moving average line and the line is starting to turn up. Price momentum is just above its neutral line for a weak but positive reading. Volume is still the problem although the volume indicator is positive. The intermediate term point and figure chart is the final bug-a-boo. Its last sign has been a bear signal and would need a move to the $450 level to reverse. Until such time as gold takes a real tumble or reaches that $450 price I think I will play it safe and revert to a neutral stand.

Looking at the short term picture things look somewhat bright. Gold is above its moving average and the moving average is decidedly pointing upward. Price momentum is positive and all seems well with the world. Oh yeh, there is that volume problem. It just doesn't seem to go away. There is also that point and figure which requires a move to the $438 level to turn bullish and what appears like one of my Merv's FAN Principle trend line situations. We have a short term decelerating FAN (i.e. the slope of each succeeding FAN trend line is decreasing in severity). Unfortunately, the third FAN trend line has not been breached to confirm a bullish trend. This confirmation of a trend reversal sort of confirms the message from the point and figure chart. Although things look bullish on the short term with the resistance suggested below the $438 level I will wait for that level to be reached before jumping on the bullish band wagon. For now, I guess I could say I am + neutral, i.e. neutral but more on the positive side.

U.S. Dollar Index

The long term point and figure chart continues to keep me on the bearish side as far as the US$ Index is concerned. On the intermediate term, the Index is just below a moving average line that is turning negative. The price momentum is also negative so for now I am bearish on the intermediate term.

Short term, things are also not encouraging. The Index is below a negative sloping moving average line with a price momentum that is negative. However, the aggressive Stochastic Oscillator is inside its oversold region and looks like it wants to turn around for a rally of sorts. Rally or no rally, it looks like further downside ahead.

Gold Indices and Stocks

The AMEX Gold Miners Index shown this week is in a real slump and doesn't show any signs of turning around. This Index, over time, may become the Index of choice as it represents some 40 gold stocks, more than any other major Gold Index in North America. Other than the fact that it is, unfortunately, calculated based upon a weighting concept (as opposed to equal weight as in the Merv's Indices) it is probably the most representative of the gold industry in North America.

Despite a short rally this is not yet the time to be jumping back into the gold stocks, unless one is a real gambler or a short seller. With over 80% of the 160 stocks in the Merv's Gold & Silver 160 Index in the bearish camp and 11% in the bullish, those are not odds one wants to fight against.

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

24 April 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.