Forum Archive Index - January 2004

["Baa Baa" <baa_baa@hotmail.com>]

Price of Gold (POG), in USD.

Still keying off the USD, although increasingly the Euro too, the POG 
remains in a corrective phase from 6/1/04 $428 high. This correction has 
retested and failed at the high, eased quickly to 417 then gapped down to 
close at 408 on 15/1, followed the day after by a first test on the 50MA 
around 405. Last week, the POG range traded between 413 and 408, but, today 
(Aus/Asia) on renewed USD strength, tested and broke the 50MA moving to 
404.50 - currently about 406. This could be either wave 5 of A down, or more 
likely wave 3 of A down. Some might consider the leading US mining stocks as 
a lead indicator, esp the mid/large cap NA's in the HUI, for example BGO, & 
NEM, both of which are well advanced in their correction (anticipated gold 
weakness).

Price action since the 13/1/04 is in a well formed PDT (power down trend). 
Key indicators show weakness -%R in oversold, STO perked up, but has crossed 
over again to ovesold, MACD oversold and recrossing MTM/CCI weakening. 
Volume has risen but in the sell side.

Projections:

Plan A - assuming USD strength continues (my TA on USDX says 89-94 range is 
target resistance trendline - currently 86.5), then, expect to see the POG 
100MA at $395 and that'll be enough to spook the weak hands for a retest of 
the all important S2 line at 378, and below that the 200MA about 373 ... 
always a strong. Response: Buy progressively into weakness, accelerating 
accumulation as each support fails and if a turn occurs, convert all dry 
powder for the ride back up.

Plan B - assuming USD weakens, unlikely imo, but anything can happen and 
often does. Look for key resistance at 413 and gap filler at 417. I hate 
buying strength, but if it pops through 425, pile in but keep a finger on 
the sell trigger. If 428 falls, hang on for the ride. I am using a 
5SMA/14EMA crossover to confirm the trend change.

Finally, "bear" in mind the 'Prechter Zone'. Widely maligned the perennial 
bears insist the failure at 428 was a 8 year top -wave 5 or (5) of 
[C]circled, which in english is OUCH! The Prechter zone for the current move 
is $50-$75 decline to the range 377-353 (ergo the 200MA!). Alternatively, 
consider the Sinclair zone ... somewhere near the moon, but even Jim is 
suggesting a decent correction if we can't break out of the trading range to 
the upside This Week..

JMO,
BAA

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