Gold Traders Almanac

DRDGold (DROOY) is South Africa’s fourth largest gold producer. Its chart portrays the extreme emotions of passion and pain that investors have had to endure during the current gold bull market. First surging with pride and outperforming many of its peers, only to suddenly be castigated and thrown out like a drunken misfit. The chart below sadly depicts that a second lynching is now underway. Bad news of mine fires, halted production, and the impending retirement of its long time Chief Executive along with the current stagnation in gold has the price tumbling.

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Despite all this negativity, I find DROOY, or droopy as I like to call it, a very useful sentiment gauge. Those of you that read my posts at Capitalstool.com may recall my comments in Spring of 2005 when a big hammer (large spike down and up) hit it and I claimed the “puke point” to be in! Sure enough shortly thereafter, the big run up in gold ensued. The same looks to be happening again and I am watching Droopy carefully for another marked capitulation signaling the next big move up is about to commence. This time we may get a less dramatic bottom. A resurgence of volume and recapturing the 50 day SMA would be a good turnaround signal as well.

Meanwhile, the break out from the golden triangle has been accomplished. Now that 665 has been overcome, next important resistance is at 690, the 1:1 extension of wave d from wave e’s bottom.

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There is ample evidence that my alternate Elliott Wave count is now the preferred count.

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This is the most bullish scenario with a large double three running correction (W-X-Y)just completing a major wave (2) correction. The only other count that works must have this triangle (Y) as a wave 4 and that would imply the major wave (1) advance has not even completed yet. Important time related factors make this highly unlikely. The recent firming of breadth I see as a healthy prelude to potentially the largest move up in precious metals yet.

This entry was posted on Sunday, February 18th, 2007 at 8:21 am and is filed under Gold Traders Almanac. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.