Houston We Have a Liftoff

By: Douglas V. Gnazzo | Wed, Jul 18, 2007
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Honest Money Gold and Silver Report

Houston We

Have a Liftoff

Wednesday July 18, 2007

Gold closed up 7.70 to $672.10 (+1.16%)

Silver closed up 0.30 to $13.20 (+2.33%)

The Dow was down 96.41

Dollar index down 0.13 to 80.25

Crude Oil up $1.03 to $75.05

10 Year Treasury Note Yield down 0.68 to 50.10 (-1.34%)

Hui Index up 13.90 to 365.10 (+3.96%)

In the recent paper titled The Three Faces of a Gold Stock Breakout I mentioned that two of the three faces were already in place: positive MACD, STO, & RSI readings; and a break above the Hui/Gold ratio trend line.

The third and final face needed for a breakout was the actual break above the upper trend line of the price of the Hui Index. That occurred today as the chart below shows.

However, a couple of caveats are in order. In the same article I mentioned that a break above the trend line doesn't do much good if it isn't sustained. In order to sustain it there will need to be a follow through move upwards on increasing volume; and the biggy would be a test of the breakout level that holds and thus turns what was resistance into support. That is the definitive qualification. So we have a liftoff - let's see if it maintains trajectory.

It was a positive day for both physical gold and the gold stocks, with the gold stocks positively outperforming physical - plus they were both up strongly, so it was a good day all around in gold land.

Also, another strong positive was that the overall market was down pretty hard, yet the gold stocks shrugged it off and rocked on. Very tasty and sweet as they say. The weekly close will be of great interest.

One last caveat - some of the gold and silver stocks are getting a bit into overbought regions/levels, however, we know how that can work. Markets can stay overbought and oversold for longer than we can remain solvent. I wouldn't be surprised if they keep on rockin, nor would I be surprised if they consolidate.

I very much liked the fact that the goldies went up today while the stock market got hit pretty good. That is a definite positive divergence. Plus, I look for the market to get hit a bit more - perhaps not tomorrow or next week - but within short term parameters. Today's action suggests that perhaps the precious metals stocks will not go down with an overall market decline. Time will tell.

Interest rates came down today and thus bonds went up. Oil had a good day, which seems to fly in the face of those who swear the BIS completely controls all markets. We should know soon enough.

Myself, I say you don't spit into the wind and you don't get in the way of the primary trend, and I don't care how much money you have to throw at it.

Stop by our website and check out the complete market wrap, which covers most major markets. There is also a lot of information on gold and silver, not only from an investment point of view, but also from its position as being the mandated monetary system of our Constitution - Silver and Gold Coins as in Honest Weights and Measures.

There is also a live bulletin board where you can discuss the markets with people from around the world and many other resources too numerous to list. Drop by and check it out. Good luck. Good trading. Good health. And that's a wrap.

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Douglas V. Gnazzo

Author: Douglas V. Gnazzo

Douglas V. Gnazzo
Honest Money Gold & Silver Report

Douglas V. Gnazzo is the retired CEO of New England Renovation LLC, a historical restoration contractor that specialized in the restoration of older buildings and vintage historic landmarks. Mr. Gnazzo writes for numerous websites, and his work appears both here and abroad. Just recently, he was honored by being chosen as a Foundation Scholar for the Foundation of Monetary Education (FAME).

Disclaimer: The contents of this article represent the opinions of Douglas V. Gnazzo. Nothing contained herein is intended as investment advice or recommendations for specific investment decisions, and you should not rely on it as such. Douglas V. Gnazzo is not a registered investment advisor. Information and analysis above are derived from sources and using methods believed to be reliable, but Douglas. V. Gnazzo cannot accept responsibility for any trading losses you may incur as a result of your reliance on this analysis and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities. Do your own due diligence regarding personal investment decisions. This article may contain information that is confidential and/or protected by law. The purpose of this article is intended to be used as an educational discussion of the issues involved. Douglas V. Gnazzo is not a lawyer or a legal scholar. Information and analysis derived from the quoted sources are believed to be reliable and are offered in good faith. Only a highly trained and certified and registered legal professional should be regarded as an authority on the issues involved; and all those seeking such an authoritative opinion should do their own due diligence and seek out the advice of a legal professional. Lastly, Douglas V. Gnazzo believes that The United States of America is the greatest country on Earth, but that it can yet become greater. This article is written to help facilitate that greater becoming. God Bless America.

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