Gold: Get some sun, stop worrying

Richard Russell snippet
Dow Theory Letters
May 29, 2008

Extracted from the May 28, 2008 edition of Richard's Remarks

Gold down, silver down, oil down (maybe), copper down, sugar down, cotton down, rice down, wheat down, CRB Commodity Index down -- what the devil is going on? Is the world deflating? Or is the world just taking a "time out?" My guess -- a time out. There were too many up-spikes, too much leverage, too much hysteria, too much hype. Give it a rest.

Gold -- Worried about gold? Don't be. Like most of the commodities, gold is "cooling it." The correction continues in gold, and we can see it clearly on the weekly gold chart below.

At its March high gold got too far away from its 40-week moving average, and now it's letting the 40-week MA catch up to its current price. The weekly histograms are now close to turning up, and the slow stochastics at the bottom of the chart appear to be scraping the bottom.

Personally, I'd buy gold here before I sold it. I think we saw the low for gold on May 1 when June gold hit a low of 849. The 40-week moving average for June gold stands at 843. So 843-849 -- that should be about the low area for gold.

Sit tight.

Get some sun.

Stop worrying.

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written May 28, 2008
Richard Russell
website: Dow Theory Letters
email: Dow Theory Letters
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