The Big Golds - how far will they correct?...

By: Clive Maund | Mon, Feb 13, 2006
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A correction in the Precious Metals sector had been a growing probability as it had powered higher week after week. Now, last week's action demonstrates that it is upon us.

Gold did not break appreciably higher when silver broke out towards the end of January, and instead crept higher, held in restraint by a long-term trendline shown in the latest Gold Market update, before finally buckling last week, no longer able to stand up to the dollar's increasing strength, forewarned of in the Bin Laden article some weeks back. Gold has risen very steeply recently, and is running a huge gap between its 50 and 200-day moving averages. Common sense dictates that it is vulnerable to a significant reaction here, and should this come to pass a corollary of this is that the big gold stocks, which are still very overbought, could give back a sizeable percentage of their recent gains fast. How much? - the following charts are intended to give you an idea.

 


 

Clive Maund

Author: Clive Maund

Clive Maund,
CliveMaund.com

The above represents the opinion and analysis of Mr. Maund, based on data available to him, at the time of writing. Mr. Maunds opinions are his own, and are not a recommendation or an offer to buy or sell securities. No responsibility can be accepted for losses that may result as a consequence of trading on the basis of this analysis.

Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications.

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