Wednesday, September 11, 2013

All That Glitters Bottoming Process More Complex

The price of gold and the gold-related equities have continued to pull back since hitting near-term highs in or around August 27. This pullback, in my mind, is a constructive trend. Although I would love that if gold/gold equities continued to rise, the pullback is also healthy in that it helps build more dry powder for even higher prices. I think I would be more worried if prices continued to rise without a corrective pullback. Besides, the pullback in price corresponds with a reduction in volume levels. This suggests that pullback is more related to weak hands exiting the market after the run up into the April downdraft. I would not be surprised to see the gold complex hitting the April downdraft multiple times, considering that the energy in the sell-off. The bottoming process looks like it will be complex.

We continue to see more positive leaning results from the timing models. All the models moved away the 0 demarcation in the latest week, primarily due to the pullback in the price of gold in conjunction with an expected increase in the money stock, the latter on regular seasonal patterns. The following show the three timing models with the latest results.

6-Month, current results -0.23



1-Year, current results -0.99


2-Year, current results -1.63

The timing continue to indicate a more constructive environment for purchasing gold and precious-metal related equities. All the while, the the risk gauge remains on the north side of 0, also indicating a positive environment for precious metal purchases.

Risk Gauge, continued positive results












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