Gold and Gold Index Ratios
posted Mar 6, 2004 at 01:05PM
Trading on the cross-over of the long term stochastics can keep one out of major trouble while catching most of the gains.
My interpretation of the tea-leaves is that although Friday's strong price action in bullion portends well for the short-term, the complex as a whole are not at optimum reentry points.
From a contrarian point of view you like to get in when the HUI overreacts to the downside in reaction to gold bullion weakness.
However when a pattern becomes too well known the market tends to throw curve-balls. The eight week cycle fell apart and those hoping for retraces, or worse those who shorted got left behind or run over.
Being mostly in cash I have been hoping for a major retrace of the entire bull run..but it is just as poasible that the bottom will come much sooner than the pattern of the past three years would suggest
Saying that I may pick up some golds, but I would see them as short term trades for now..a week two weeks. I am not in a rush..if this is the start of a major upleg then picking up stocks on a retrace would still put one in good stead
A cautionary Gold Report article on gold from people who have been pretty spot on during this gold rally can be read HERE