CHARTWORKS - MAY 24, 2009
Gold Update

Technical observations of RossClark@shaw.ca

Bob Hoye
Institutional Advisors
May 27, 2009

The spike up in gold into May 21st - 22nd fits well with the pattern analysis we've been using. The targeted resistance for this interim rally has been $950 to $960. Now that we've achieved that level we find that two indicators have entered overbought territory based upon similar points of development in the 1994, 2002 and 2006-07 consolidation patterns. The price is straddling the upper 50-day Bollinger Band and the CCI (50) readings of +138 in the GLD and +142 in the COMEX futures are above +120.

A pause in the uptrend would be healthy.

To remain in the context of the 14-month "megaphone" pattern the deepest correction we look for will be a 50%-60% retracement of the rally from the April 17th low of $865.

Timing models point toward a low in the second half of June, premature from a normal seasonal perspective, but in line with the best bull market moves of the past four decades, Ideally, that will provide the last opportunity to buy a dip before a challenge of the all-time highs. (A corrective low in crude oil would also fit well at that time.)

May 24, 2009
-Bob Hoye
Institutional Advisors
email: bobhoye@institutionaladvisors.com
website: www.institutionaladvisors.com

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