-- Posted Sunday, 12 February 2006 | Digg This Article

A correction in the Precious Metals sector had been a growing probability as it had powered higher week after week. Now, last week’s action demonstrates that it is upon us.

Gold did not break appreciably higher when silver broke out towards the end of January, and instead crept higher, held in restraint by a long-term trendline shown in the latest Gold Market update, before finally buckling last week, no longer able to stand up to the dollar’s increasing strength, forewarned of in the Bin Laden article some weeks back. Gold has risen very steeply recently, and is running a huge gap between its 50 and 200-day moving averages. Common sense dictates that it is vulnerable to a significant reaction here, and should this come to pass a corollary of this is that the big gold stocks, which are still very overbought, could give back a sizeable percentage of their recent gains fast. How much? - the following charts are intended to give you an idea.

-- Posted Sunday, 12 February 2006 | Digg This Article

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