Newer subscribers may not be aware of the bigger picture themes we are carrying for HUI, Gold and Silver as we manage the ups and downs of shorter time frames.
On that (short-term) note it is good that gold is not getting bid on the China Corona virus story this morning as stocks pull back with that fear of contagion the assigned reason by mainstream financial media. It’s good that gold does not get that bid so its knee jerk distortions will not be in the market and in need of being cleaned up later.
Back on message, here’s a simple update showing the big pictures with some comments. It’s a rough game plan that looks past the daily and weekly noise.
I am expecting a rally to a theoretical point C of an A-B-C bear market correction. Do I think this is a bear market? Not necessarily. But I like that the target range is significantly higher even if it is a bear rally.
We’ll talk of a bull market when the time comes but the overwhelmingly green lower panel indicators on these monthly charts (including HUI) imply it could be.
Gold is in a bull market, at least a cyclical one. 1378 was the gateway to it. Now gold is dealing with major resistance. If/when it takes out this area the next objective would be a new all-time high. Volume has stair stepped higher since 2016. It had been making a nice, orderly downward monthly bull flag but the US-Iran tensions got into the market, spiked it upward and lately it has been easing to address that. It’s still working on the resistance zone.
While daily charts show support higher (our original pullback target was the SMA 200, which is now at 1436 and the SMA 50 is at 1496), critical and very solid ‘breakout re-test’ support is that horizontal green bar shown below.
Of course, the gold stocks have massively under performed the metal but the HUI/Gold ratio has broken out of the post-2016 consolidation.
Here’s a closer view (weekly). It’s not broken, but it has been pulling back and needs to hold in the support area above .135 to keep it okay.
Silver is flagging like gold, but about a million miles lower. As with gold, volume interest is building over the last few years and that is positive. If silver takes another leg higher (indicated by taking out the 2016 high at 21.23) the target would be 26. As with HUI, even a bear rally to that level would send silver stocks much higher and could be a good run for those trading instruments on the metal.
Again, there is nothing new here. But sometimes I like to dial in the big picture as an ongoing frame of reference for the noisier little pictures we deal with every week.