In early March, with gold futures trading $10 lower, I pledged that I would never become a shill for gold, nor would I send out any bulletins exhorting you to beg, borrow or steal every dollar within reach to plow into bullion. I believe I’ve kept my promise to avoid sensationalizing the case for gold, even if this has made Rick’s Picks a duller read for many of you. That said, I should also note that, with a current target of $477, I am not exactly in the bear’s camp. But neither am I about to hype $500 gold as though it were a done deal.

For the moment, with bullion quotes in the throes of a ten-month correction and trading about where they were last December, I’m tempted to warn that those who would attempt to fire you up with predictions of a pyrotechnic breakout are being at least somewhat disingenuous. Perhaps they’ll be right; but if so it will not be because of something they can discern on the charts that I cannot, but rather because they’ve been predicting the “imminent” breakout on a regular basis for the last several years. I read and interpret the same charts, and although they lead me toward moderately bullish expectations (i.e., $477), I can discern no technical basis for asserting that significantly higher prices will be achieved any time soon.

(Click on chart to enlarge)

The foregoing was prompted by the following query from a subscriber: “While you were away, the pullback in the XAU to 21-day support offered us gold bugs an opportunity to reenter the market. Unfortunately, without your guidance the XAU and HUI continued lower yesterday, below support, recovering somewhat on Thursday. While we wait for better opportunities, could you offer some insight to their next move, and pivot points, for those of us who reentered the market in your absence?”

Ah, while the cat’s away…  I’ll try to tackle your question in Friday’s Touts, but let me first offer some perspective. To be candid, my hidden-pivot system offers little basis for a “blast-off” signal. In theory, one would occur if gold were to hit a “buy” trigger simultaneously on the monthly, weekly and daily charts. But don’t hold your breath, because the closest price where this could occur is $624, a monster pivot whose breach would likely clear the way to at least $998. Short of that, however, it would still take a move above a $511.50 peak made in 1983 to create a bullish impulse leg with the power to reach the trigger threshold at $624.

In the meantime, we’ll have to content ourselves with lesser stuff -- much as we’ve been doing. We currently hold long-term positions in three gold stocks that were acquired at such opportune prices as to all but negate the risk of a loss. Moreover, we’ve further lowered our cost basis in each by trading around the respective positions, taking partial profits at minor-cycle highs. This is the way we’ll continue to play it, so that, when the Big Surge finally comes, we’ll be comfortably aboard and able to scale out stock on rallies. But load up for an explosive move? That is not only unwise, but unnecessary – a source of frustration that we can easily avoid.