Gold Sector Parameters Reviewed
- Gold Price: 1690 is important support, next big support is 1625-1650
- Silver Price: 32.50 is short-term support, then 31 and finally big support at 28
- Silver-Gold Ratio: Still in short-term uptrend. Expect silver to continue to lead gold if FOMC comes with the inflation on the 12th.
- HUI-Gold Ratio is breaking down from the Bear Flag. The yellow highlight shows the area that must hold to avoid a negative signal with respect to a projected buying opportunity. Can ‘they’ break all our signals in an ultimate shakeout? Yes.
- HUI loses the 62% Fib retrace level, targeting the 420 support area we have noted previously. Sensitive momentum indicators like CCI and STO either indicate HUI can get a lot more over sold or HUI is building a bullish divergence. So which is it?
The precious metals are conveniently taking the hit into what could be the most strategic FOMC meeting of the year. It helps to have gold under control when you are preparing man made policy that will ultimately prove destructive from an inflationary standpoint.
Thus far however, it has served us well, relatively speaking, to put the tin foil hats away and just deal with what is. What is is a technical breakdown on HUI. Technical breakdowns tend to induce technical selling.
Speaking personally, I feel so much like an opportunist now but it seems like the clock is taking forever to tick toward 12.12.12 (FOMC). Where previously I have noted that I hold “too many gold stocks” and needed to hedge, I now hold too much cash and need to be ready for what I think could be a climactic event.
If we see gold taken to the low 1600’s and the miners find support and hold or turn up the HUI-Gold ratio in conjunction with FOMC, we will likely be on an opportunity; a potentially excellent one.
Short of that, the precious metals have taken a sufficient drubbing and could bottom any time before the FOMC. Have patience, but also understand that the bottom will not stand up and announce itself.
I continue to believe that the HUI-Gold ratio is the most important tool in play. If it diverges positively from bearish nominal price activity in gold and even gold stocks, then it should be a good and bullish signal. If it breaks down however, it is going to make being contrarian bullish much more difficult, for me at least. I am looking for a combination of this kind of bullish underpinning (HUI-Gold), support levels and FOMC to provide an inflection point.