Long term charts change very little from week to week. Anyway, looking at the P&F chart (not shown this week) provides the comfortable feeling that gold is not about to fall over the top. With new highs and projections to the $600 level what more can one ask for? When we have long term trends in motion I like looking at a P&F chart. It just emphasizes in a very simple manner what's happening.

Since mid to late 2001, when the long term price momentum first broke above its neutral line into the positive zone it has stayed there throughout. On a few occasions the momentum line came very close to breaking below its neutral line but remained above. It is once more moving aggressively into higher levels but is at an interesting point. We have a negative divergence in the indicator during the Jan 2004 high and the Dec 2004 high. Price making higher highs but momentum making lower highs. By drawing a down trend line through the two peaks we come to just above where the indicator is today. So, we're looking to break above the trend line, which would give us some additional hope that the divergence may be nullified and no reversal is ahead. The price is far above both the popular 200 DMA (40 WMA) and my more aggressive 150 DMAw (30 WMAw) lines. The volume indicator, using a weekly chart, is very, very positive but I do not place too much emphasis on this time period volume information.

On the long term I can only remain BULLISH.

Looking at intermediate term charts we are in a bull trend right now and far away from any reversal, P&F wise. We need two things, an up trend line break and a move below two previous lows. At this point in time that could not occur until the $430 level.

Both the volume indicator and the price momentum indicator are well inside their positive zones. The price is above its moving average line and the line itself is aggressively pointing upwards. From the intermediate term standpoint there is nothing in the charts that requires caution. Short term and immediate term require a more detailed look but that is for my Merv's Precious Metals Central subscribers.

On the intermediate term I can only remain BULLISH.

This week the Indices had undergone a major review and revision. All of the Indices were affected to some degree. The higher the "quality" of the Index the less affected it was by any change. Changes are highlighted in the commentaries against the individual Index.

I have had many good suggestions as to stocks to watch from readers. I am grateful for these. They are all placed in my folder of precious metal stocks to watch and on the occasion, to include in the various Indices as appropriate. This folder has now grown to over 700 North American traded stocks so there is a wide universe of precious metals related activity going on. I have no doubt that I am missing many interesting stocks so suggestions are always welcome. I do miss including many very interesting and potentially very bullish stocks into the various Indices because of my criteria for inclusion (but they are included in the folder for future potential). For inclusion the stock must have an active North American trading history of no less than a year, otherwise some of the information cannot be developed in the tables. The larger the company the better the chance for inclusion, although I leave a lot of openings for the exploration stocks which are normally quite small. So, let's see what's going on in the various Indices.

MERV'S GOLD & SILVER 160 INDEX

This is the Index where I determine what's in and what's not. This past week 6 stocks were deleted and 6 new stocks added to the list of 160. Two of the deletions were substantial stocks but were deleted for different reasons. Western Prospector, still a very bullish stock, was deleted because it was primarily a Uranium stock and did not fit into my "precious metals" group. Another primarily uranium stock, CanAlaska Ventures will be deleted once it has been sold or stopped out from my weekly recommended list. The second substantial stock deleted was Randgold & Exploration due to their primary venue move to the Pink Sheets. There is something going on here that is still not clear (their former Chief Executive was shot to death recently). When things clear up and trading resumes on one of the larger trading exchanges it will no doubt be listed again. Other stocks were just deleted from the 160 due to lack of activity.

Although up some 2.6% on the week this Index still has a little more to go to get to new all time highs, established in early 2004. The trend is there, however, and it might not be long before the Index is into new highs.

MERV'S QUAL-GOLD INDEX

I try to keep this Index as an Index of the 30 largest precious metals stocks traded on the North American markets. It is the "quality" Index. The only changes were a move out by 2 stocks and a move in by 2 stocks. The reasons for the move were strictly a serious change in market capitalization. The stocks are chosen based upon market capitalization but unlike most other Indices the Index value calculation then does not take capitalization into account. Each is weighted the same.

Here too, despite being up 2.6% on the week this Index still has a little ways to go to get to new highs, but it's headed in that direction.

MERV'S SPEC-GOLD INDEX

This Index is sort of like a secondary or mid-tier precious metals Index. Included here are the next 30 largest precious metals stocks traded on North American markets, based upon market capitalization. That may not be precisely true as at the lower end of the capitalization scale I do take a few liberties as to which stock is included and which not. But in general these are the second tier of 30 largest stocks. Here, I had 3 deletions and 3 additions. 2 of the deletions were transferred to the Qual-Gold group.

This group seems still to be a little behind the trends. It has not yet made new 2005 highs and has still a long way to go to reach its previous 2004 top. The speculative or mid tier stocks have not yet REALLY moved. This can be seen by its relatively poor weekly performance with only a gain of 0.7%.

MERV'S GAMB-GOLD INDEX

This Index is meant to represent the gambling variety of stocks, of which there are a good number overall in the 160 Index. As you might imagine, being the most aggressive Index it also goes through the greatest changes. This past week 6 stocks were removed and 6 added. This may not yet be the end as over the next few weeks a few more changes may take place but this is it for now.

With a gain of 4.7% on the week this Index had the best performance of the Merv's Indices and the major North American Indices. It is now well above its 2004 high but due to an aggressive move earlier in this year, it is still just a fraction below this year's high. See the chart this week.

Next week it will be back to looking more at the Index performances. I have talked too long and must end.

Reading the Info Table

For a tutorial on reading and benefiting from the technical information in the table please go to the www.themarkettraders.com web site and access the SAMPLE section of Merv's Precious Metals Central. There you will find the tutorial as well as samples of the component tables of the various Merv's Gold and Silver Indices.

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

www.themarkettraders.com
merv@themarkettraders.com

2 October 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.

To find out more about Merv's various Gold Indices and component stocks, please visit www.themarkettraders.com and click on Merv's Precious Metals Central. There you will find samples of the Indices plus other publications of interest to gold investors.