Tuesday, August 7, 2007

Another Look at Gold Stocks

Everyday, I analyze 70 charts that are, in one way or another, related to the gold market. Out of these, the overwhelming majority are reading bullish. I'll show one example of just one of these bullish indications.

The first chart shows the relationship between gold and aluminum. I encourage you to check out this link, so that the following chart will make more sense.

As you can see, the last 4 signals this chart gave proved to be accurate. The above chart is currently on a buy signal. Only time will tell if it can make it 5 for 5.

However, out of the charts I look at, there is only one that is causing me some concern, and that chart is of the US Dollar.

The problem is that the US Currency is right on support. I can't imagine gold rallying significantly until this support is broken. However, if it is broken, it would be unimaginably bullish for gold and gold stocks. Because the US Dollar index has never broken this level of support in the history of its existence, it would be a major milestone, and a triumph for all gold bulls.

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