GOLD
Snippet
Richard Russell
Dow Theory Letters
17 January, 2003
Gold --Gold remains overbought, but so far gold has not corrected. Whether this will continue, obviously I don't know. I do know that in very strong or bullish trends, an item can "correct" simply by holding in a tight high range while the moving averages continue to rise and the overbought situation is "worked off" through time, even as the price tends to hold.
This could be what's happening to gold. It's remarkable that gold has been holding above 350 day after day, even though it is overbought. How do I know gold is overbought? The 200-day MA of gold is down at 321, so gold at today's price around 352 is 9.6% above its 200-day MA. That's a wide spread, and normally an item that is near 10% above its MA will correct to the downside. The correction may come to gold, but so far, Gold has been holding.
In the face of persistent negative comments in the media, that's a pretty strong performance for gold. Even its detractors have to be impressed.
Later comments on gold -- A late surge in gold today carried the metal to a new high. The gold stocks were up, but almost reluctantly up. I take this as skepticism towards the gold move -- even on the part of gold stock shareholders. Nobody can really believe that gold is dirt cheap at this time.
Amazing -- they believe that dollars are money, but they can't believe that gold is the only real money. That will change "as time goes by."
Truth always emerges, even it takes weeks, months or years.
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