Gold Bull Market - Trick or Treat?

By: Dudley Baker | Mon, Oct 30, 2006
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As I write this article before the opening on Monday the 30th, we have gold trading at 602 and silver at 12.08.

Most of the articles we read on these websites are suggesting that we have bottomed and the 'bull market' is still alive and will rise again to exceed its high of last May possibly by years end.

So, we have to ask, Trick or Treat?

Will the markets give us what we want or will we be tricked one more time to the downside before we really get this party started once again? It does appear that everything is lining up once again, and especially after we get the upcoming election out of the way in the United States, we will know for sure.

Sometimes corrections such as we have been experiencing for the last few months can ware us out and we (all investors) get complacent and do not pay attention to the markets as we should. This is of course the reason for the corrections to take the excess optimism out of the markets before the markets once again head up.

We do not by any means pretend to be charting experts but we do like to look at charts. So, what are the charts telling us? Let's take a look at the daily charts on Gold, the HUI Index (also weekly) and the U.S. Dollar.

Note the great positive divergence in the RSI and MACD. In other words, as Gold was making a low the week of Oct 9th, it was not confirmed by the RSI and MACD.

Once again notice the positive divergence in this chart.

The weekly chart of the HUI to us reflects a continuing bull market and a successful test of the 280 level building a strong base for the next rise.

The U.S. Dollar has clearly broken down which will support the upward move in Gold.

What we see and conclude from the above charts is that Gold has bottomed, the HUI is looking great and has successfully tested support just below the 280 level and the U.S. Dollar is finally breaking down once again.

Everything is looking good, right? Well, let's not forget it is Halloween.

While things appear to be lined up very nicely, we could be tricked one more time to the downside before being treated to the real party that lies just ahead.

We believe that investors should already be positioned for this coming up come. How to position yourself depends on your personal investment philosophy, personal involvement and level of risk.

For those conservative investors and those 'leaving the decisions to others', perhaps your best choice is some of the popular precious metals mutual funds. For most investors, we believe the best strategy is a portfolio of mining shares and long-term warrants on the mining shares. If you are not familiar with warrants you will find a lot of educational information on our website.

Those of you reading this article are the savvy investors already interested in the precious metals. Think of all of our friends and relatives that will not even listen to us, YET! They will all join us for this party but not everyone shows up at the same time. Don't be discouraged, get on board NOW!

Happy Halloween - Trick or Treat



Dudley Baker

Author: Dudley Baker

Dudley Pierce Baker
Founder/Editor - Guadalajara/Ajijic, Mexico
A Market Data Service for Warrants

Dudley Pierce Baker is the founder and editor of Common Stock Warrants and its predecessor, Precious Metals Warrants and a 1967 graduate of St. Mary’s University in San Antonio, Texas with a major in accounting.

Disclaimer/Disclosure Statement: is not an investment advisor and any reference to specific securities does not constitute a recommendation thereof. The opinions expressed herein are the express personal opinions of Dudley Baker. Neither the information, nor the opinions expressed should be construed as a solicitation to buy any securities mentioned in this Service. Examples given are only intended to make investors aware of the potential rewards of investing in Warrants. Investors are recommended to obtain the advice of a qualified investment advisor before entering into any transactions involving stocks or Warrants.

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