To: Crimson Ghost who wrote (42581 ) 9/29/2005 11:13:56 AM From: ild Read Replies (2) | Respond to Steven Kaplan turned bearish on gold shares.truecontrarian.com CONTINUE TO SELL GOLD MINING SHARES AND OTHER COMMODITY EQUITIES, AS WELL AS EQUITIES IN GENERAL (September 28, 2005): Looking at a chart of HUI, the Amex Index of Unhedged Gold Mining Shares, it has a very bullish long-term series of higher lows dating back to November 2000, not to mention a rise of nearly 600% ($1 invested in gold mining shares at the absolute low in November 2000 would be worth roughly $7 today). However, since December 2003, HUI has been making a reliably bearish series of lower highs. This "triangle pattern" will eventually resolve itself as an upside breakout, probably in the first half of 2006. However, in the short run, the bearish pattern of lower highs will almost surely prevail, as gold mining shares therefore decline over the next several weeks. HUI has made three important lower highs just since Monday, September 19, with the behavior on Monday, September 26 especially bearish, since an attempt to break the previous week's peak was met by aggressive block-trade selling by institutions and insiders, as often happens before a sharp short-term decline in gold mining shares. In addition to the pattern of lower highs in HUI, the historic seasonality for gold mining shares almost always signals either a high or a low in November. Given the recent behavior of precious metals, November 2005 will most likely be a low. Since the long-term pattern of higher lows is intact, the November 2005 lows for most gold mining shares should be above their late August 2005 lows, while HUI completes a bottom in November above its August 30, 2005 nadir at 198.78, probably near 206. Many commodity shares, including oil and other energy producers, appear to be completing their own bearish topping patterns, as the entire group of commodity-producing equities should see marked weakness over the next two months. The financial media has evinced especially egregious ebullient commentary toward most commodity producers during the past two weeks, which is almost always acutely accurately coincident with a short-term peak. Meanwhile, as U.S. equity indices continue their gentle bear market which began on August 2, 2005, overall market breadth has been deteriorating significantly over the past several weeks, with almost no media attention to this fact. This is a classic precursor to an accelerated short-term decline in U.S. equities.
