These are strong buy signals in gold and silver. We pointed out a few letters back that triangles were being set up in these issues. the breakout has occurred. We are adding to our positions in these issues. Note, of interest that gold is bouncing off the 2005 trendline. We have been basically long gold for years, but you don’t want to hear the details. It would make you celebrate and cry.
The problem now is that we really don’t believe that this is the beginning of the end. The high of 100.44 (in GLD) must be taken out by at least 3% before we believe it. And even then we don’t believe it until we see it. While we expect a downwave in the market here we don’t think this is the leg where gold will go to 5000. We think this is a trading leg, so we will use and oscillator technique here and try to sell strength at sosme point in the near future.
Remember our letter about “Too clever by half”? This probably is. Probably the best method is just to keep buying gold and taking 20% downdrafts and not worrying about it.
Shortly we will put up a Basing Point analysis inn order to completely bamfoozle everybody.
At the least our strategy of having a toe in the issue reaped some profits here.