Can You Hear The Train Leaving The Station?

by Frank Barbera, CMT. September 9, 2005

Figure 1: XAU Weekly Summation Index October 2002 to Present

Above: A short term view of the XAU Weekly Summation Index, which shows the Indicator is on a cyclical buy signal with the indicator above the moving average and both the indicator and the moving average in a rising trend. The Weekly XAU Summation Index closed this week at 109.02, up from 92.72 last week. The Summation Index 10 week moving average closed at 74.54.

XAU Weekly Summation Index

Time Span Table - "Readings Above +1000"

Date Started	Date Ended:	Total Duration
04/26/1974	01/18/1980	298 Weeks
01/09/1981	05/27/1983	123 Weeks
09/30/1983	07/24/1987	198 Weeks
11/13/1987	01/07/1994	320 Weeks
03/11/1994	Present	600 Weeks
		*& Counting!

Next, we see the XAU Weekly Summation Index with a long term view. Note the time intervals between readings above +1000. Each decade has seen at least 1 set of readings above +1000 with peak readings of +1243.05 on 1/25/74, +1366.39 on 11/21/80, +1310.68 on 8/12/83, +1108.07 on 1/28/94, and +1195.48 on 10/9/87. The highest reading of this bull cycle thus far has been +854.24 on 4/8/04. Importantly, WE HAVE NOT SEEN A READING ABOVE +1000 IN OVER 10 YEARS!

Every single major bull market in the past has generated a +1000 reading and this one will likely prove no exception. Consider, that the XAU up over 4% this past week, the index moved from 93 to 109. Usually, a move +100 to above +1000 will take months, and invariably corresponds to huge percentage gains on the XAU.

Figure 2: XAU Weekly Summation Index November 19, 1971 to Present

As an example, between November 19, 1971 and January 4, 1974, the XAU advanced from 10.14 to 36.83 for a gain of 263.21%. Over that period of time the Summation Index went from below zero to +1000. From January 19, 1979 to January 18, 1980 the XAU advanced from 34.19 to 88.07, a gain +157.58% and again the Summation Index moved from near zero to above +1000. In 1994, we saw the Summation Index start closer to -300, with a reading of -307 on 2/12/93. At the time, the XAU stood at 76.19. By January 21, 1994 the XAU stood at 135.42, as the Summation Index crossed above +1000 for a gain of 78.77%. The implication at hand would be that the XAU could easily double over the next 12 to 18 months, which would target the XAU into new all-time high ground above 180 and likely above 200.00. That means BIG PROFITS dead ahead for Gold Stock Investors!

© 2005 Frank Barbera, CMT

Contact Information

Frank Barbera, CMT | Editor, Gold Stock Technician
PO Box 48072 Los Angeles, CA 90048 | Email