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Gold & Commodity Analysis

**Also check the messge board for updates**

- You'll also find a comprehensive analysis of gold in my weekly newsletters

Compiled by Matthew Frailey - matt@breakpointtrades.net

Current Analysis: March 13th - Gold is in a strong up trend after bottoming near $413 in early February. The next resistance levels for gold are near $446 and $456. Gold is in either in wave 3 or wave C of an Elliot Wave up trend. Also note: The commercial net short position in gold has risen from a low of 38k in early February to 109k on March 8th. This is something to keep an eye on as it's starting to creep up.

Silver has strong support near $7, and a near term target of about $8

Feb 10th - Gold metal looks like it has finally bottomed. The Elliot 5 wave formation has ended and a new uptrend has begun. Also great news, the commercial net short position has fallen to 38k, therefore this is the BOTTOM! The commercial net short position typically falls to between 30k to 50k during major bottoms.

Gold stocks had a hell of a day on Feb. 10th and the elusive bottom is probably in now. Realize that gold stocks will not go straight up in a V pattern, but will likely stair step up. It's also possible that gold stocks rally for a short time, then pullback to form a higher low. Either way, I'm very happy with the action and I will look to accumulate more gold stocks on pullbacks. If the elusive bottom is in, then gold stocks will have a great 2005.

**Check out this chart, very interesting** Gold - Short Interest and ABCD Waves

---------------------- See the Article on my HUI gold stock trading method at www.zealllc.com

Just click on the chart symbols in the tables below to pull up a chart from Stockcharts.com and you will find a detailed explaination right on the charts.

Gold Metal
XAU Index
HUI Index
US Dollar
CRB Index


Gold ETF!!! - GLD

Exchange Traded Fund for gold. An easy way to buy and sell gold via an ETF without having to own the metal itself. Note, GLD is nearing an uptrend line which is a low risk area to buy this ETF.

Gold Short Interest!!! - CFTC Commitment of Traders - Link

****See the following chart: Short Interest - Chart

As you can see form the chart above, by noting the 'net' commercial short position on gold, one can fairly accurately predict major tops and bottoms in the gold market.

Commercial traders tend to have the highest net short position near major tops in gold (typically 150K on average). While during major bottoms, the total net short position is typically 30-60K.

The commercial net short position as of Feb. 8th was 38k. THIS IS THE BOTTOM!!!

Currently, as of March 8st., the commercial net short position was 109k for Futures only and 143k for futures and options combined. This is something to keep an eye on as it's getting near levels where gold tops out.

***Note, to compute the current value, subtract the commercial long postion from the short position on the Futures chart to get the total net short postion.

Comparison of Gold to other currencies:

Gold, as priced in relative US Dollars, is in a strong bull market. Thus far, the bull market in gold has been primarily a function of a falling US Dollar, which has been in a steady decline since early 2002.

However, in order for gold to really take off, like it did in the late 70s and early 80s, gold needs to rally relative to foreign currencies as well.

Current Analysis: Keep an eye on the Gold/Rand chart, it is close to breaking a significant down trend resistance line which would be positive for South African gold stocks.


Other Metals


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