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In July I noted here that the Gold/Silver Index (XAU) on the
Philadelphia
exchange had turned positive with the OBTR giving a Buy
signal on 7/23. The
Buy signal was negated on 9/9 and just reinstated on 9/25.
This index has
now broken out of a pennant pattern on the upside and is now
bumping up
against its 200 day moving average which is in a downtrend.
I find it useful to also chart the Johannesburg All Gold
Index. Where the
XAU gave a strong buy signal in July, the All Gold Index
gave a very weak
signal. Close analysis of the XAU and individual stocks
will show that the
strength has been in Silver and Platinum, not Gold. Gold
carries the risk of
further central bank sales that will effect Silver and
Platinum much less
than Gold.
I find it interesting that the Comex inventory of
deliverable Silver has been
dropping all year. At the beginning of the year there were
203.5 million oz
in inventory. At the end of August it had dropped to 164.3
million oz and as
of 9/25 the inventory stood at 142.6 million oz. It is my
understanding that
European Silver users are coming to the US to replenish
their inventories.
The June 16 issue of Forbes noted that silver has tumbled
from $50 in 1980 to
under $5 now, and seems unlikely to fall much lower. Two new
research reports
-- one from the Silver Institute of Washington D.C. and the
other from CPM
Group of New York -- show silver demand has outgrown new
supply for eight
years straight now. Thus there has been a significant
amount of inventory
liquidation. Sometime this market is going to take off.
I bought a small position in a couple of Golds in July along
with a position
in both Silver futures and CDE (Coeur d'Alene Mines), a
silver producer. My
Golds have done little but my Silver futures are up about 50
points (at $200
a point) giving me about a 132% return on my investment
since July. CDE has
gone from 12 5/8 to $15 during the same period of time. CDE
has just broken
out of a pennant pattern and moved above its 200 day moving
average. Very
strong OBV. I plan on adding to my position.
If you have any interest in Silver go to:
http://www.pennaluna.com/prospect.htm
Bob Doeden
Chicago
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jeff f brady wrote:
> How about those Gold stocks! Nope, I don't own any, got a
Brady break out
> on HM today, I beleive that is a gold stock...
> Still hanging on to my Dell and GE options (calls) and TMX
shares...
>
> The surf was un real here today in So. Calif! Check out
> http://www.surfcheck.com
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