(click on the chart to enlarge)
Commentary: As anticipated, the Gold Bugs Index is showing a potential reversal off the uptrend line and the 50 day moving average. Although the RSI uptrend since late June has been broken, the short term RSI uptrend since the August 24 bounce is still intact. Gold successfully tested $610 on several occasions late last week and avoided a breakdown so far. In the next few days, the August 22 (Tuesday) deadline imposed by Iran for its response to the anti-nuclear incentives package and the August 31 deadline imposed by the UN Security Council for Iran to cease enrichment activities may figure prominently in determining the direction of Gold and Gold stock prices until the end of the month hopefully ushers in the seasonal increase in physical Gold demand.
Conclusion: Friday may have been a good time to jump back into Gold and Gold stocks though Monday may yet offer a similar opportunity. Chance for short term upside reversal from here is good, but need to watch for a possible uptrend break since USD Index is not especially bullish for Gold and RSI (momentum) remains below 50 (negative). The HUI uptrend will be at around 325-326 on Monday.
Current PM Exposure: 92% of portfolio (increased from 24% on Friday).
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