He's a great thinker on gold and well respected within the gold community. Here's his latest thoughts on the the dip in gold and the HUI.
Putting things into perspective.
-> Posted by Rambus @ 1:45 am on July 27, 2007
As bad as this last week felt, was it as bad as our emotions make us believe or was it just another week in this 15 month old grinding consolidation pattern? Keep things in perspective when looking at the minute charts.
Patterns can change very fast in the micro world but in big picture the change may be hardly noticable. After reading todays post I detected alot of emotional stress from some of the folks under the tent. It may have been due to expecting to much from our minute charts and when they turned down the air was let out of alot of sails. So here we go again another swing down in the much bigger consolidation that we thought was supposed to be our breakout. Folks we can’t tell the market when it is supposed to breakout she tells us. She told us this week in the XAU for instance that the breakout last week will be tested and that is what we are doing right now.
Today we backtested the breakout and even traded well below the top support rail for awhile before we had a fairly decent rally at the end of the day to close above the support rail. This was a big positive in my book. So at this point, this is exactly what we should have been looking for is the backtest. We got it, and the only way we could get it is with either a slow move down taking up time or a fast move down taking up very little time.
The point I’m trying to make here is nothing out of the ordinary happened, we got our move down to backtest the breakout and that is where we are now. Some folks bought today when things looked the worst and that is how you play this game by buying the dips. There is no guarantee these folks will be right but at least they are buying low. They had to fight their emotions just like everyone else who buys into weakness and be strong when others are weak.
The market is nothing more than physcological warfare and when you learn to control your emotions you can start to have fun as you will be on the right side of the trade more than the wrong side. Below are the daily charts of the XAU and the HUI. It is obvious that the XAU is stronger than the HUI at this time. Today the XAU backtested its breakout where the HUI still hasn’t even broken out yet. Onthebeach, your 21:57 who is the author of this chart.
That was a chart I posted awhile back trying to show the May 6 month inverted time cycle and its also a good chart to show that even tho we wanted this breakout more than ever the HUI wasn’t ready yet to give in. When looking at the HUI chart all we did was get back to the top rail and nothing more. We are still consolidating and until we can break the top rail and move higher we have to accept the fact that we still have some more chopping around to do. Its not the end or the world by along shot.
As Irish would say its just a flesh wound and nothing more. We have to stay strong and not let our emotions get the better of us when the chips are down. Actually I’m feeling pretty good in here as I know we are alot closer to the end of this consolidation than to the beginning.
Don’t let your emotions get the better of you and stay strong…Rambus