IAG

The only real prevailing certainty in this market right now is VOLATILITY. This measurement of fear has seemed to put a nice floor under gold. Certainly the world’s quest for the ultimate refuge has taken a big chunk of volume from the other indices which continue their futile attempt at scaling the “wall of worry.” I think this will continue and the technical chart seems to agree. A classic Cup and Handle continuation pattern has formed on gold’s daily and it appears that the handle is almost complete and poised to break out. Also, with the manipulation associated with the Comex option expiration behind us and the dollar a bit Topy, the stars could be lined up. Furthermore, gold’s supply side is very limited, the production side is declining and the demand side is rising and has changed from jewelry demand to investment demand.

So, moving into June, we could have the perfect storm for a launch to a new level for gold and gold equities.

Take a look at IAG (Iamgold Corp.). The technicals mirror the $GOLD chart very well to serve as a proxy to the physical. WEEKLY: The share price rose to a high in December, pulled back to value, then ran up for a retest that failed. From the looks of the shallow retrace, it appears to be recharging for another run at the high. DAILY: The MACD-H is rising after it bottomed, following a price pull back which found support at the 150MA (forming the bottom of the handle). Next week I’m looking for an upside breakout, leading to a Fast/Slow EMA crossover and subsequent MACD MA x-over – both of which should help to ramp volume. At that point the gravity will let go and blue sky won’t be far away. We’ll see.

Steve M