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Gold, A Technical Perspective

Commodities / Gold and Silver 2010 Jan 21, 2010 - 07:30 AM GMT

By: Dudley_Baker

Commodities

Best Financial Markets Analysis ArticleWith the big $27an ounce sell off in gold on Wednesday, many are ready to throw in the towel, again.

Every time we have a significant sell off, on any given day, everyone gets panicky. We have seen this numerous times in the past and we will continue to see days of panic in this long term bull market.


If you are a trader, and most of us are not, you are already out. If you are a long term investor with positions in mining shares, take a deep breath, relax and keep your eyes open.

Those of us with a long term perspective realize there will be days like this and we need to use this time to add to current positions in the junior mining sector which is our favorite choice for making substantial gains within the next 24 months.

Remember it was only last November that gold hit a record high of $1218 and with Wednesday’s close of $1111 that gives us a retracement of less than 9%. Big deal!

We do acknowledge that this consolidation may take a few months to play out and we could reasonably expect a further decline.

But, let’s step back and examine what the charts are saying for gold using a daily, weekly and a monthly basis.

Daily Chart for Last 12 Months:

Weekly Chart for Last 5 Years



Monthly Chart for Last 9 Years (Beginning of This Bull Market)

Personally, we follow numerous analysts and sometimes it is difficult to wade through all the noise. Our assessment is that a substantial amount of the decline is behind us but we are mentally prepared for a further decline around the $1075 level. We don’t want to see this but it could happen and it that level does not hold, we could possibly see a test of the 65 Week Moving Average around $995 as identified on the last chart above. We see this $1,000 level be our worst case scenario. Whether we hold at $1075 or drop to the $1000 level, it will then be the last great buying opportunity before gold makes a monster run and takes the entire mining sector up with it.

We would encourage investors to continue searching for great buying opportunities in the junior mining sector. Search for those companies with great management, great properties and be alert for those companies which have long term warrants available and trading.

If you would like to know more about warrants, we encourage you to visit our website for an in-depth discussion of warrants, many examples, how to trade warrants and much more.

For those readers unfamiliar with our services:

  • PreciousMetalsWarrants.com provides an online database for all warrants trading on the natural resource companies in the United States and Canada.
  • InsidersInsights.com tracks the buying and selling of corporate insiders with a focus on the junior mining and natural resource sectors. Buy and Sell Alerts are issued as deemed relevant based upon our analysis.

We encourage all readers to sign up for our free weekly email.

Dudley Pierce Baker
Guadalajara/Ajijic, Mexico
Email: support@preciousmetalswarrants.com
Website: PreciousMetalsWarrants
Website: InsidersInsights

Dudley Pierce Baker is the owner and editor of Precious Metals Warrants and Insiders Insights. Articles are written by Dudley Baker along with contributing editors, Arnold Bock of Mendoza, Argentina and Lorimer Wilson of Toronto, Canada. PreciousMetalsWarrants provides an online subscription database for all warrants trading on junior mining and natural resource companies in the United States and Canada and a free weekly newsletter. InsidersInsights alerts subscribers when corporate insiders of a limited number of junior mining and natural resource companies are buying and selling.

Disclaimer/Disclosure Statement:PreciousMetalsWarrants.com is not an investment advisor and any reference to specific securities does not constitute a recommendation thereof. The opinions expressed herein are the express personal opinions of Dudley Baker. Neither the information, nor the opinions expressed should be construed as a solicitation to buy any securities mentioned in this Service. Examples given are only intended to make investors aware of the potential rewards of investing in Warrants. Investors are recommended to obtain the advice of a qualified investment advisor before entering into any transactions involving stocks or Warrants.

Dudley Pierce Baker Archive

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