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Eric Hommelberg: The relative Gold Chart (rGold) is gold divided by its own 200 dma. It has proven to be a reliable indicator in spotting major bottoms for gold ever since the gold bull market began in April 2001.
November 3, 2009
Relative Gold:
The relative Gold Chart (rGold) is gold divided by its own 200 dma. It has proven to be a reliable indicator in spotting major bottoms for gold ever since the gold bull market began in April 2001.
Since the gold bull market began in April 2001 gold made two major tops in which it exceeded its own 200 dma by more than 20%. (rGold value > 1.2). This happened in May 2006 and in March 2008.
On the downside gold has made some major bottoms in which it dropped below its own 200 dma by 5 - 10% (rGold value 0.90 - 0.95)
The rGold range of 0.90 - 0.95 has proven to be a reliable BUY indicator indeed over the last 7 years.
For more from Eric, and the GoldDriver.com click here.
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