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December 18, 2005

Monthly Minders
by Gary Tanashian

A simply critical juncture for gold miners. HUI makes new highs amid bearish divergence, but monthly chart shows it has not yet proven itself.

The dollar meanwhile, has so much going on it can be confusing. The daily and weekly charts show support lost and bearish divergence by RSI. The monthly however shows bullish divergence intact longer term, a bearish rising wedge into resistance and support on the coming(?) wedge breakdown at 86's.

What does unchecked euphoria, momentum and speculative gaming equal? Why, a likely trip to the 450's of course. This even though more and more advisors are predicting a major correction, which certainly leaves open the possibility of more upside - for the METAL, not necessarily the gold stocks.

Adding to the theme of general confusion, we see oil flashing contradictory signals as well. The chart says it may have found support here and will head back north. Many are expecting it, as is this writer. But the monthly chart says oil could easily visit the low 50's before any resumed uptrend.

Odds and Ends:

Although bearish newsletter writers don't want to hear it, the US manufacturing sector is currently booming, and by all personal anecdotal evidence, much more so than official ISM figures have thus far indicated. Machine tools cannot be kept in stock. Raw materials such as copper, brass and aluminum are flying off the shelves, but not for hording. They are being fashioned into end products. This is our fundamental reason for being bullish oil (however tentatively at the moment) and paper goldbugs should remember that higher oil will be decidedly not good for miners' bottom lines unless gold goes orbital. Metal goldbugs don't worry about such things.

It has become a foregone conclusion that the US productive sector is all but dead. Biiwii.com will soon present commentary centered around the brilliant comment made by a friend of ours: "If American manufacturing were a stock, it would be deeply over sold."

Hope you're having a nice weekend!

Gary Tanashian
http://www.biiwii.com/

Disclaimer: biiwii.com does not recommend that any trading or investment positions be taken based on views expressed on this site. If you speculate or invest it is suggested that you consult a financial advisor qualified in your area of interest.

Copyright © 2005-2008 Gary Tanashian

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