The 'Death
Cross' No One's
Talking About
Many in the
business are
saying that gold
and the shares
recently hit
bottom and we
have begun a new
wave up.
Possibly, but we
see some warning
signs which are
preventing us
from going
all-in.
Perhaps you have
heard of the
Death Cross.
A Death Cross
occurs when the
50 Day Moving
Average crosses
below the 200
Day Moving
Average.
While the chart
of gold or
silver does not
display a Death
Cross, virtually
all of the gold
indices, HUI,
XAU and the GDX
witnessed a
Death Cross in
late June and
the question now
is:
Where Do We Go
From Here?
With further
analysis and
research we find
that for the
Death Cross to
be almost a
'sure thing'
that the
slope of the 200
Day Moving
Average is
utmost
importance.
In other words,
if the 200 Day
M.A. is stilling
trending upward
then the Death
Cross is only
waving a caution
flag. But if the
200 Day M.A.
starts rolling
over and
trending down
then we have
both the 50 Day
and 200 Day
moving down and
it is time to be
extremely
cautious and a
high probability
of further
declines coming.
A review of a
couple of charts
will paint the
picture for you.
The first chart
is of the HUI,
Gold Bugs Index
and clearly
shows a recent
Death Cross, but
the 200 Day M.A.
is still
trending
slightly higher
to flat but very
close to turning
down, and if
over the next
several days or
1 or 2 weeks the
200 Day M.A.
turns down then
the shares are
in trouble.
The second chart
of gold shows
that no Death
Cross has
occurred with
the 50 Day M.A.
over 100 points
above the 200
Day M.A.
While many
investors are
ready to buy
into the recent
strength in gold
and the shares,
we must maintain
our still
cautious stand
on the markets
while always
maintaining core
positions.
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Dudley Pierce Baker -
Owner/Editor -
Guadalajara/Ajijic,
Mexico
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Webmaster and
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Phoenix, USA
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