The Sordid Mess That is the HUI Gold Bugs Index

It’s a tough racket, this gold stock racket. In January of 2016 everyone was convinced that HUI was going to the target implied by the lousy 2015 pattern. And no, I am not writing this as if I was the lone wiseguy who was bullish. As I recall we were very open to targets in the 60s or 70s.

Huey then made a false breakdown, reversed and ass launched too far, too soon against fundamentals that were starting to erode (as we noted at the time). It then formed a large H&S the implied target of which has not been registered. That would be the red box at lower right. Can an H&S target take so long to finally register? Beats me.

And now, a baby H&S-like pattern with a neckline breakdown comes into play.

The tough thing is that HUI is not obviously oversold to the degree where you’d consider it a buy (given the improving fundamentals). But then again, it was not that way in January, 2016 either. The big oversold reading had already come early in 2015 (ref. RSI). In today’s specimen, the big oversold came last summer.

Hey look, it’s a brutish ugly chart. It’s gross and it begs caution and patience. Meanwhile, gold miners are operating their businesses this quarter against relief in the ratio of cost input oil to product, gold. So who the hell knows? It’s tax loss season, the stock market has not yet scared a critical mass of casino patrons and we’ll just take things week to week, month to month. It’s all you can do with this mess, and I don’t mean just gold stocks. Personally, I am struggling with my inherent lack of patience right now, which is why I am the guy always writing about patience!

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