Finally gold managed to break-out of its gruelling 5 months down-trend which started early May this year. Gold shot up straight up to $611 on Monday Oct 30 but almost gave up all its entire gain just to hover around its 200 dma for about two days. Today however gold convincingly closed $10 higher at $616. This marks indeed our major ‘BUY’ signal since the 2006 gold correction will be featured in financial history books as from tomorrow.

In other words, the downside risk is almost none from here onwards and as stated many times in our Gold/HUI dispatches the upside potential is tremendous and yes, we could well be witnessing $800+ gold within a year from now. (more on that in our weekly Gold/HUI update coming Sunday) ..

Newmont’s president Pierre Lassonde came out today saying more or less the same, he said:

Newmont executive sees gold over $700 in 12 months

Wed Nov 1, 2006 5:57pm ET

"Our view over the next 12 months is you could see a downside for gold of $20-$35, but on the upside you could very well see $700 gold in 12 months," Newmont Mining Corp. (NEM.N: Quote, Profile, Research) President Pierre Lassonde said.

 

"Mine production is set for its fourth annual decline and next year's total worldwide production will be down again.

 

"We are seeing central bank selling abating and some central banks are starting to buy gold. So you will have less gold for sale and higher demand," Lassonde told Wall Street analysts on a conference call to discuss Newmont's results.

 

END.

Now let’s take a peek at the updated gold chart:

Now with gold acting strong the gold shares are still in state of disbelief since the HUI couldn’t even rally at today’s gold $10 rise.. Well, as the gold-chart above clearly demonstrates the 200 dma acts as a resistance on the way up, just like it acts as a support on the way down..

As the HUI chart below clearly demonstrates, the HUI couldn’t take out its 200 dma to the upside today but watch out when it does, the gold shares could be launched significantly higher! The HUI has some catching up to do indeed with gold. The HUI needs a close above 325.

Conlusion:

The 2006 gold correction is over and gold’s next up-leg could be a spectacular one.The HUI is lagging gold these days but once it takes out its 200 dma (325) the HUI could be launched significantly higher

More details in our weekly Gold/HUI dispatch to be published on Sunday Nov 05.

Stay Tuned, 

Best Regards,  

Eric Hommelberg & Partners

The Gold Discovery Letter/

The Gold Drivers Report

www.golddrivers.com