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September 17, 2006

What's Going On With Gold?
by Robert McHugh

Gold is forming a Minor degree wave 4 Symmetrical Triangle, which is a consolidation pattern of the Minor degree wave 3 rally that started back in 2001 and extended into the May 12th, 2006 top. It means Gold is headed much higher once the triangle completes, into a Minor degree wave 5 up. If Gold drops below $540, then the alternate labeling showing a wave c-down of 2 down correction is occurring. Once complete, Intermediate wave 3 up should catapult Gold to new frontiers. Any way you cut it, a huge rally is coming in Gold, and should be well underway by late 2006.

The EW labeling for the HUI shows that Intermediate degree wave 1 up completed on May 11th. Since then, we see a three wave "Flat" for Intermediate degree wave 2 down, correcting Intermediate 1 up. So far, Minor wave "a" down finished in June, wave b up was a three-wave affair ending with a small Rising Bearish Wedge, a.k.a. Ending Diagonal Triangle, complete with a spike throwover, which was promptly followed by a vertical plunge in the HUI, Minor degree wave c down, which is still in process. What looked like an Ascending Triangle morphed into the Ending Diagonal Triangle.

Instructive is that what followed the spike throw-over in the HUI is what we expect to occur in major equity averages that sport a similar Rising Bearish Wedge Ending Diagonal pattern.

Minor degree wave c down of 2 down is still in process and could take the HUI down to the 260 area should wave 2 down want to correct a Fibonacci phi .618 of 1 up, a run that lasted from May 2005 through May 2006.

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"And as for me, I know that my Redeemer lives,
And at the last, He will take His stand on the earth."
Job 19:25

Robert D. McHugh, Jr. Ph.D.
Main Line Investors, Inc.

Robert McHugh Ph.D. is President and CEO of Main Line Investors, Inc., a registered investment advisor in the Commonwealth of Pennsylvania, and can be reached at www.technicalindicatorindex.com. The statements, opinions and analyses presented in this newsletter are provided as a general information and education service only. Opinions, estimates and probabilities expressed herein constitute the judgment of the author as of the date indicated and are subject to change without notice. Nothing contained in this newsletter is intended to be, nor shall it be construed as, investment advice, nor is it to be relied upon in making any investment or other decision. Prior to making any investment decision, you are advised to consult with your broker, investment advisor or other appropriate tax or financial professional to determine the suitability of any investment. Neither Main Line Investors, Inc. nor Robert D. McHugh, Jr., Ph.D. Editor shall be responsible or have any liability for investment decisions based upon, or the results obtained from, the information provided.

Copyright © 2004-2008 Main Line Investors, Inc. All Rights Reserved.

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