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Ross Clark continues:


“It is key that investors understand these markets experienced similar volatility in the 1970s.  For now, if we can hold solidly in this $1,625 area, gold should be explosive for the second half of the year.  The mining shares, which have been lagging, should dramatically outperform the price of gold in this next bull leg.


I believe the following piece will help put things in perspective for the gold and silver bulls who have been a bit concerned about the recent action.”


Precious Metals are Poised for a Bounce


“Our ongoing comparison of the 2003-04 and 1976-80 markets in gold related to the action of the current bull market continues to move along with few deviations. The scheduled late-February early-March high, coupled with the HUI testing its upper 50-day Bollinger Band, concluded with the dramatic $100 ‘leap day’ break in gold on February 29th. The next two time windows of significance were to be lows at the end of March and again at the end of May with the best advance following the second low.”


Continue reading the Ross Clark piece below...  




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“The 61.8% retracement ($1625) of gold’s December to February rally continues to be an important support. Holding this level will keep it in the context of November 1979, with a close above $1770 (and 550 in the HUI) confirming the start of the next upward phase to new all-time highs in the bull market. A violation of $1625 would likely lead to new lows for the year as we move into late May.


The silver, mining indices and S&P are also moving similar to 1979 (even without the help of the Hunt brothers).  The Barron’s Gold Mining Index peaked in October 1979 in both nominal terms and relative to the S&P (see ratio).  This was followed by a period of underperformance and a 23% decline as the metals consolidated. It then increased by 122% (88% relative to the S&P) into February 1980.


The HUI is currently oversold having declined by 28% from the September highs. The ratio of HUI/S&P has oversold StochRSI(14) readings found during optimum buying opportunities throughout the last 10-year out performance versus the S&P.”










The opinions in this report are solely those of the author for the private information of clients. Although the author is a registered investment advisor at CIBC Wood Gundy, this is not an official publication of CIBC Wood Gundy and the author is not a CIBC Wood Gundy analyst. The views (including any recommendations) expressed in this report are those of the author, and are not necessarily those of CIBC Wood Gundy. The information contained in this report is drawn from sources believed to be reliable, but that accuracy and completeness of the information is not guaranteed, nor in providing it does the author or CIBC Wood Gundy assume any liability. The information given is as of the date appearing on this report and neither the author nor CIBC Wood Gundy assume any obligation to update the information or advise on further developments relating to the information provided herein. This report is intended for distribution in those jurisdictions where both the author and CIBC Wood Gundy are registered to do business in securities. Any distribution or dissemination of this report in any other jurisdiction is strictly prohibited. The author and / or CIBC Wood Gundy may have holdings in the companies discussed and may offer advice or have an investment banking relationship with the companies discussed in the report.


© 2012 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.  However, linking directly to the blog page is permitted and encouraged.


Eric King

KingWorldNews.com

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