Thomas
DeChastelain
Memorial Archives

Bullion Charts and Commentary
posted Aug 27, 2005 at 04:10AM

Bullion Daily



Has bounced off first attempt to overcome horizontal resistance but remains above key price support metrics. This chart remains in bullish alignment.

Bullion Weekly



Certainly lots of room to support a burgeoning impulse leg up.

HUI Daily



Closed the week in a cluster of moving average support lines as well (not drawn) a three-month trend-line.

There are many possible "structures" one could draw around the HUI...for now I remain focused on the possible reverse head & shoulders. For symmetry purposes I have slanted the trend-lines which impacts potential downside targets.

HUI/Gold Ratio



Darth Vader Daily



Again the 50 dma is the metric to watch for short-term traders. Right now we have a classically bearish picture with a strong move below the 50 dma followed by a failed test which now confirms this metric as resistance.

A move above this line would indicate a move to retest or even exceed old highs.

Just a little prologue

England has just introduced laws which would allow them to deport any "cleric" who advocated violence. What I would have given to be a fly on the wall at 10 Downing street when Robertson, a "cleric", started advocating murder. All of this was going on while I was reading "Mein Kamp", the section on "foreign policy" which just added that touch of notable surrealism to the whole affair.

Of course going through Hitler's ode to hate, one gets a sense of the path that America is embarked on. Throw in a lost war (where the war is not lost, but where say a Democratic president just gives up on), followed or accompanied by severe economic trauma and all the ingredients are there.

Of course even in good times Americans have a fetish for extreme idiologies. Ironically like the neoconservatives he would hang, Hitler would have seen the current religious right as an ideal base of people to start from.

Fanatical and most importantly, obedient.

Suffice to say, that, in the big, multi-decade picture terms, I see nothing to change my view that not only is America circling the drain - they remain oblivious to thier predicament.

Getting back to the Gold Sector


On the whole the charts portray a benign picture for the gold sector. All of the overbought technical levels pointed out in the last commentary have been worked off. Better yet this was done without breaking price support levels. Obviously momentum indicators are showing signs of rolling over but nothing that can't get whipsawed.

Even better is the fact that bullion is entering what seasonally is a strong period (Seasonal Chart ) as people gear up for X-mas - at the same time that the central banks have announced that their sales are finished for the year.

"Never in doubt! - Always Wrong!" could be the working slogan for the bright lights running America today, and there is certainly no lack of budding potential crisis areas for them to muck up.

The really big fly in the ointment remains the COT structure which has not improved one iota and remains at historically bearish levels. I really don't understand why the commercials have made such large negative bets.

I guess one could spin that this is finally the time that the commercials are going to get squeezed, but making that bet is like saying you know where lightening will strike.

So from a sheer timing perspective I don't think the time is ripe for adding new positions. In the past I have marked two or three periods where the COT structure went from an optimum sell level to an optimum buy level with only marginal drops in the bullion price. Obviously that is what I hope will happen.

For myself I intend to hang on to those gold shares which have performed well to date and sweat out the retracement. I have ditched the stuff that had remained basically flat since the sector bottomed. My portfolio has become dominated by oil sands plays, which I want to hang on to, and yet maintain certain percentage cash levels in case everything goes to hell in a hand basket. One needs to get downright Darwinian in one's stock selection.

Good trading,

Bullet Bullet Bullet