Sunday, September 7, 2008

18 week cycle bottom?

As I posted in stockcharts public chart list gold is getting very close to a major 18 week cycle low. I think there is a good chance that the bail out of the GSE's may have manufactured that low just a little bit early. I wasn't expecting it for a few more days. As you can see in the chart the gold:XAU ratio is about as stretched as it has ever gotten. We should see a powerful rally in mining stocks maybe starting tomorrow and if not tomorrow, soon.
I'm still expecting that rally to ultimately fail but if gold can regain $850 there is a good chance it will at least test the 200 DMA again. That could put gold back in the $900 range.