Market Wrap Week Ending January 11

Honest Money Gold & Silver Report

by Douglas V. Gnazzo | January 14, 2008

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Gold

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

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.

Hui Index

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. 

Xau

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. 

Xau/Gld Ratio

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.

Hui/Gold Ratio

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. 

Copyright © 2008 Douglas V. Gnazzo
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About the author: Douglas V. Gnazzo writes for numerous websites and his work appears both here and abroad. Just recently he was honored by being chosen as a Foundation Scholar for the Foundation for the Advancement of Monetary Education (FAME).

Disclaimer: The contents of this article represent the opinions of Douglas V. Gnazzo. Nothing contained herein is intended as investment advice or recommendations for specific investment decisions, and you should not rely on it as such. Douglas V. Gnazzo is not a registered investment advisor. Information and analysis above are derived from sources and using methods believed to be reliable, but Douglas. V. Gnazzo cannot accept responsibility for any trading losses you may incur as a result of your reliance on this analysis and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities. Do your own due diligence regarding personal investment decisions. This article may contain information that is confidential and/or protected by law. The purpose of this article is intended to be used as an educational discussion of the issues involved. Douglas V. Gnazzo is not a lawyer or a legal scholar. Information and analysis derived from the quoted sources are believed to be reliable and are offered in good faith. Only a highly trained and certified and registered legal professional should be regarded as an authority on the issues involved; and all those seeking such an authoritative opinion should do their own due diligence and seek out the advice of a legal professional. Lastly Douglas V. Gnazzo believes that The United States of America is the greatest country on Earth, but that it can yet become greater. This article is written to help facilitate that greater becoming. God Bless America.

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Douglas V. Gnazzo | Honest Money Gold & Silver Report, LLC
Canton Center, CT USA | Email | Website

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