There is nothing technical, fundamental, esoteric, or complicated about these charts. This is simple, basic and a most powerful type of analysis. It is not often mentioned by those bent on applying more dramatic, proprietary or you name it type of analysis. Using a monthly chart is most important. These charts tell you when and at what price buyers have been willing to step up and buy. If the buyers change their mind you will know it because there will be a lower low separated by many months. It is the higher lows separated by many months that provide a simple but powerful clue. If buying in volume appears, that will be the turn. At this point in time the buying volume should be large and large blocks of stock should appear on the tape if the turn is here. This from an old time tape watcher who remembers when 3 million shares a day was a big volume day. A close below the 284.85 low posted on the charts would indicate that something is dramatically wrong with the bullish picture for the HUI, gold and silver. The 284.85 low for the HUI occurred 13 months ago. I will go out on a limb and say that I believe the bull has returned, is snorting mad and ready to do harm to those who doubted his intentions. The next Delta Long Term turning point is a high and has been added to each chart. The Delta Turning Points will assist us in determining when the ultimate high has arrived for the HUI, gold, and silver. The only ingredient usually missing, that would allow one to benefit handsomely by this type of analysis, is PATIENCE and the Delta Turning Points. The more patience you have the more money you will make and the faster it will appear. This is indeed a paradox.
The HUI has maintained a steady stream of higher lows ever since November 2000. The lows are separated by many months. The many months and on several occasions more than a year’s time between higher lows are very impressive. The long term trend, the tidal movement is unmistakably up. If the HUI closes below the 284.85 level it will be signaling a dramatic change of long term direction and pattern from bullish to bearish. If this occurs it will be indicating a massive collapse of our economy. Bankruptcies of many major and minor corporations along with millions of personal bankruptcies will be the order of the day. Foreclosure of homes will enter the several million a year league. Unemployment will be at least as great as it was in the depression of the 1930’s. That was estimated to be in excess of 25%. A potential default by the government of the United States of America on all of its debt and an exchange of 1 new dollar for 10 or 20 of the old dollar would be a strong probability. This means that the United States of America would be considered less worthy than a third world country. Millions of citizens and families will be homeless and starving. The heads of starving families will be breaking into food stores and stealing bread a la Victor Hugo. I do not believe this will occur at this time. Hyper inflation is a greater probability. The beginning of hyper inflation was signaled when individual tax payers were given up to $600 as a gift by the government in order to stimulate the economy. This money was created out of thin air, or rather electronically created out of thin air. A government gift of $600 per person can quickly grow to $6,000 and more. The government motto is, “Anything but a depression.” To bet on a depression and collapse at this time is unrealistic.
HUI MONTHLY CHART
The long term trend, tidal movement, and higher lows for gold have been up since July 1999. The 21 month simple moving average has not been violated since the $271 low. On the few occasions that the price of gold has touched the 21 month simple moving average a clear buy single was given. The $784 low in the month of August was our long term buy signal.
GOLD MONTHLY CHART
The same approach, for investment purposes, that is utilized for gold and the HUI may be utilized for silver. The problem with silver is the swings are huge and nerve wracking.
SILVER MONTHLY CHART
The S & P 500 has been in a bear market since January 2000. The final C leg down is underway. The MACD indicator did not confirm the 1585 high of October 2007.
In a regular flat correction, wave B terminates about at the level of the beginning of wave A, and wave C terminates a slight bit past the end of wave A. E. W. P.
regular flat correction
S & P 500 QUARTERLY CHART
The Dow Jones Industrial average is undergoing a severe type of multi-year correction. The pattern heralds the probability of a severe decline below the 2002 low.
“Far more common, however, is the variety called an expanded flat, which contains a price extreme beyond that of the preceding impulse wave.” E. W. P.
DOW JONES INDUSTRIAL AVERAGE
The precious metals complex turned bullish at about the same time that the S & P 500 and the Dow Jones Industrial Average turned Bearish. The overall lack of interest in the gold complex is evidence that its bull market has a long, long way to rise before the ultimate high is reached. I do not believe that this coming rise will require more than 18 to 24 months in order to reach its ultimate goal. The ultimate goal in my opinion is multiples of the current price. The gold shares will reflect this rise as it takes place.
Disclaimer: The contents of this letter represent the opinions of Ronald L. Rosen. Nothing contained herein is intended as investment advice or recommendations for specific investment decisions, and you should not rely on it as such. Ronald L. Rosen is not a registered investment advisor. Information and analysis above are derived from sources and using methods believed to be reliable, but Ronald L. Rosen cannot accept responsibility for any trading losses you may incur as a result of your reliance on this analysis and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities. Do your own due diligence regarding personal investment decisions.