The Turn in Gold and Gold Stocks is Looming

Note how strong that most commodities have been acting even though the dollar has been on a strong, sharp rally.  That did NOT happen during the credit crisis.  This dollar rally has all of the earmarks of an intervention--it does not appear to be fundamentally driven.  In fact, today the US markets did quite well even though the dollar broke above 78.  Even the energy complex, notably oil, has generally been rising.  There are certainly no signs of a credit crisis or panic in the air.

Today, only one chart.  This one should say enough.

The HUI has basically been running within the channel it has set since the beginning of 2009, and we're quite near the bottom of the channel.  Gold is quite oversold now.  The dollar is quite overbought.  Look for a pullback to the trendline at the lower end of the channel near 400 and a turn up, even if gold is down for the day.  That should mark the turn for gold and gold stocks.  Be sure to review some of the relative performance charts we posted last week and do some homework over the holidays.  Gold investors may get the gift of heavily discounted gold before the end of the week!