Honest Money Gold and Silver Report: Market Wrap
Week Ending 1/11/08
Gold had a good week, up $32.00 to a new high of $897.70 (+3.70%). In the last three months gold has gained approximately 20%. The second phase of the gold bull is underway.
Silver had an even better week than gold, as the white metal gained 6%. Price broke above overhead resistance to make a new high. More of the same may lie ahead.
The Hui had a big week, gaining over 7% to a new all-time high. It closed the week out at 475.16, up 31.41 points.
Since its August low of 284 the Hui has gained approximately 190 points or 67%. From its 2006 high of 401 it has gained over 18%, the bulk of which was done over the course of the last three months.
The weekly chart below shows the index above its upper Bollinger Band, which means the index, is extended.
RSI is approaching overbought, but bull markets can stay overbought for long periods of time - or not.
MACD has put in a positive cross over. The histograms have plenty of room to move up.
The daily chart shows the breakout above its former high water mark, forging ahead to new highs.
RSI is entering overbought territory, but that doesn't mean it can't go further into overbought territory. It simply is what it is.
MACD and the histograms are well into positive territory and are flashing overbought readings.
At the bottom of the chart is the rate of change (ROC) indicator that is just testing the 20 level, which is considered to be extended price action as well.
The Xau monthly chart below shows it approaching the upper trend line of its rising channel. So far during the bull market, this trend line has been solid resistance - defining the upper levels of all rallies.
The higher the number the better the gold stocks are doing versus gold. Since mid-December the ratio has been rising, however, it is still below its upper trend line, and has made a series of lower highs.
The Hui/Gold ratio shows pretty much the same as the above Xau/Gld chart. The chart below goes back to 2003, and shows the last higher high to have been made at the end of 2003.
In 2006 a lower high was recorded, and presently the ratio is well below its upper trend line.
If a strong bull market in the gold stocks is to continue, this trend line will have to be broken. I suspect that it will be - all in good time.
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