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Gold/Mining/Energy : Gold and Silver Juniors, Mid-tiers and Producers

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From: atthetable	11/24/2005 12:48:05 PM
	of 78408

Some TA on the dollar and gold, yesterday from John Murphy at StockCharts.... DOLLAR WEAKNESS COULD HELP COMMODITIES... Although the link between the dollar and commodity prices hasn't been that strong over the last year (both have risen together), the two markets have moved in opposite directions since the start of September which is their usual pattern (Chart 4). Yesterday I showed the CRB Index (and crude oil) bouncing off their 200-day moving averages. Any significant pullback in the dollar could give a boost to commodity markets which are near chart support. Gold, which has been rallying along with the dollar, is nearing a major test of its own. GOLD NEARS TEST OF $500 ... The major trend of the dollar has, in the past, had a major impact on the major trend of gold. Chart 5 shows that the Dollar Index (green line) and gold normally trend in opposite directions. The dollar peak in 1984 helped launch a major gold rally. The dollar bottom in 1996 resulted in big gold declines. They sometimes trend together for short periods of time, but eventually return to their normal inverse relationship. The dollar peak at the start of 2002 launched the latest bull market in gold. Over the last three months, however, both markets have been rallying together. That's not likely to last. I suspect that one of them is due for a fall in the not too distant future. Although I remain bullish on the long-term trend of gold, I'm somewhat nervous as it approaches major chart resistance around $500. Gold may run into some profit-taking as it approaches that chart and psychological resistance barrier. A dollar pullback from current levels could help soften the impact of any gold selling.

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