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Gold Correction Should End this Morning - Mike Swanson(7/19/06)

Submitted by Mike Swanson on Wed, 2006-07-19 07:39.

The correction in gold stocks continued yesterday and this morning gold is trading down 7 dollars at around 620 ahead of the 8:30 CPI numbers and Bernanke's statement and testimony to Congress scheduled for 10:00. I'd expect gold and the rest of the markets too to rebound with his testimony. I really doubt it will be as scary as people think and has the potential to give hope to bulls. All he has to do is suggest that he's on watch for signs of slowness in the economy and will react to it and the markets should rally.




Gold stocks began to hold up against the metal yesterday into the close. The XAU/gld and HUI/gld ratios are both starting to trend back up - as gold stocks are falling at a slower pace than the metal. This is exactly what we want to see happen. Gold stocks should rebound soon back into the top of the range(the 140-150 area).

If gold stocks start to go up between 9:45 and 10:15 I am going to add on to some of my positions and place stops at them on the day's low. Will continue to hold my core positions if I get stopped out of those. Some stocks that I am looking at include: GRS, TGB, AEM, BGO, NXG, KGC, CLG, GLG, NEM, and ABX. They have been performing the best since the June low.

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