As gold is breaking its daily chart flag and taking the next leg up toward the 1378 gateway (big picture resistance as noted on the monthly chart) dialing back to the smaller (daily) picture we have noted that the HUI/Gold ratio (HGR) needs to break out and hold above its 200 day moving average in order to give a significant bull signal.
Barring a head fake type reversal the ratio (HUI/GLD) is positive again today and now back above the SMA 200. So it is not just gold (and silver) breaking upward but the miners too, to a greater degree. Not bad progress folks.
If HGR makes a new high it’ll probably get volatile (especially considering gold’s bear/bull gateway, which everybody – including the machines – sees) but the odds would increase that this indicator can ultimately grind out a win for a big picture bullish view in this important battle after all the failed attempts of the past. HGR must change trend by taking out and leaving behind the SMA 200 to confirm a bullish indication for the under valued gold mining sector.
An HGR breakout and gold approach of 1378 likely will not mean ‘buy’ in real time. It would more likely be a profit taking opportunity for traders. But talking big picture, it would be a good sign for a new bull phase that is more than the usual bear market bounce rallies we’ve had since 2016. So let’s see how this develops. I think it is notable that HGR did not drop as far on the recent pullback as it has on previous pullbacks during post-September rally.