Gold Charts R Us
Welcome to GCRU #62 on May 7, 2003. It’s been a jolly good gold week! Bullion rose $10, as I write at mid-Tuesday. Gold broke upside from its slanting neckline of the reverse H&S base last Wednesday & never looked back. It rose 3 of last 4 days & is ahead so far today. Gold rose to next neckline, the line that goes back to last Dec, which defined the big H&S of Dec to Mar. That’s history now as gold broke down from that neckline, fell to 320, built a reverse H&S base, & has been rising since—on the way to 355 & then in gradual stair steps, chewing thru overhead supply til we get back to the top of that famous downwedge pattern, at 380-390. It should be as simple as it sounds & I think it will, with many opportunities to sell & buy back along the way in individual shares, each having its own flight path. Sadly, some So. Africans have downdraft paths, thanx to an inept/racist SA govt. To make it worse, some US legal cowboys are suing the best SA stk, Goldfields, for environment defects, for $7bil. Happily for my readers, I sadly warned re SA stks long ago & pulled 2 out of GCRU & declined to put them in the Schultz Gold Index. Mr Gold, Jim Sinclair, commented on this on his www.JSMineset.com yesterday, saying: “This suit will kill the HUI (Amex Gold Index) as a good indicator as it contains SoAfr golds. XAU is already out of fashion due to hedgers & silvers. That leaves the Schultz (pure) Gold Index the only index worth watching, IMO.” Amazing; SGI went from a new boy on the block to topdog in 9mos. J ••Visit Jim’s site daily for hottest gold comments in town. He’s the only one who has been-there-done-that in the gold world. ••U can be confident of gold price appreciation as U view US$ price depreciation. It hits new lows almost every day. Rallies are feeble, despite US govt intervention (via ESF slush fund). A new reason for $-collapse is selling by Saudis, to be followed by all other Muslim nations who are not only unhappy to see their $ ‘s worth less daily, but welcome a chance to secretly kick Bush in the knees for mounting a war against them by calling for regime change in all their nations—via US style democracy. Mr.B. has no idea what genie he let out of the bottle! ••Most $’s are going into euros. As a rocketing euro gets overbought, $’s & euros will go into gold, as currency options shrink. As I said in HSL on Sunday: World Dollarization has stopped & reversed gear. The world can only become less so. ••Mkt strategy? Sell into indiv stk strength &/or use trailing-stop orders to protect shorterm profits. Buy/rebuy when/if prices break thru resistance. Also buy on pullbacks from resistance levels, in strongest stks, if indicators confirm. Hedging (shorting) can be reduced for now (I did) & reactivated as we get into 350 zone. There’s no real loss in shorting if U R far more long than short, & it provides insurance. ••As gold is in an updraft, U can be a bit more generous with stop/sell levels in case gold cuts thru resistance at 344 easily but be ready to tighten up on signs of temp exhaustion. ••Top RS stks: Glamis, Eldorado, Viceroy, Inmet, Randgold, ••Cheerfully, your alchemist, Uncle Harry
Schultz Gold Index (SGI) – daily chart – line on close (5/06/03):
Cautious base activity & steady advance from March lows (rather than knee-jerk rally from same levels) supplying potential foundation for possible run & successful breach of crucial Dec-Feb overhead supply/resistance. Per last week, traders are advised take full/partial profits as/when SGI advances into key 5.16-5.60 resistance, &/or tighten stops to squeaky tight levels to follow possible upside. Selling into strength & re-buying breakouts may mean missing part of an upside move, but offers cheap insurance against painful & unnecessary draw downs, & increases leverage/buying power if pullbacks develop. Next noteworthy buy cue will come on 2-day close over 5.60, or on strength after pullback to Dec 2001 trend line if confirmed by Spinner. Lighten up on solid break below Dec 2001 uptrend, with final exit no lower than 2-day close below 4.24. Monitor SGI chart action daily via our web site.