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

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From: heinz44	4/10/2007 2:06:36 AM
	of 78419

The Triple Buy Signal in Gold Stocks Volume 8 - Issue 11 - Circulation 83,5000 Dear Investor, If you have been watching gold stocks or if you own them this chart below is the only thing you need to think about right now. It is on the verge of giving us a Triple Buy Signal. Signals this powerful normally lead to 7 to 12 month runs in gold stocks. Basically, the next big rally is about to begin. So, if you are on the sidelines right now you may want to strongly consider buying gold stocks this week. And if you are already invested in gold stocks you need to decide whether or not you want to buy more. Gold stocks have been in a long consolidation phase for over a year now. In the past, every time gold stocks have gone through similar long consolidation patterns they have emerged to launch powerful bull runs. There are three technical signs that suggest that this pattern is about to repeat in the near future: 1) Simple support and resistance trendlines are a staple of technical analysis. As you can see, the XAU gold stock index has been locked down by its upper resistance trendline since May of last year. The XAU is now only points away from breaking above this trendline resistance level, an act that would generate a second long-term buy signal for gold stocks. In the past twelve months, every time it has rallied up to this trendline and failed to break out, a sharp correction occurred. If gold stocks don't immediately drop hard, they will be poised to break out and close above this trendline resistance level to generate a powerful buy signal. This trendline is currently at 146 on the XAU. 2) The 200-day bollinger bands are coming together. Bollinger bands measure the volatility of an index. When they come together it means that volatility is shrinking. This is important because shrinking volatility leads to expansive moves 3) The action in gold stocks tends to lead the action in the metal. It is bullish when gold stocks outperform the metal and bearish when they lag the action in gold. During this past consolidation phase, gold stocks lagged the metal, just as they did during the last two long consolidation phases. This caused the XAU/gld and HUI/gld ratios to decline as you can see from the above chart. The last two consolidation phases ended once the XAU/gld ratio broke this downtrend line. The ratio has been steadily moving up during the past three weeks and is close to breaking out. Such a breakout would give us a third long-term buy signal

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