Huey’s cart of rocks headed downhill [w/ edit]

The HUI Gold Bugs index continues to sink

[edit] I think it’s worth adding that the risk vs. reward in quality gold miners is very positive now, regardless of price. RvR could take some time to be expressed, but that oversold reading plus those (likely) capitulating gold bugs spell positive risk/reward in the face of the almighty hawking Fed.

And who is surprised? Well, you know I am not if you subscribe to NFTRH or listened to the Podcast from June 18. The macro was noted as being in transition toward a favorable environment for gold stocks, but ‘transition’: noun, the process or a period of changing from one state or condition to another. And ‘process’: noun, a natural or involuntary series of changes.

A process will take whatever time it needs to complete. As noted in the link above, Jordan did mention my reservations about the near-term fate of the sector. As noted at the end of the post:

* Although he adds this as part of the intro summary: “Although Gary is worried there could be a final liquidation in gold stocks, not unlike 2008 or 2020, he says the macro situation is turning in favor of gold stocks.”

My response was…

“I assure you, I am not at all worried. I’d actually prefer the massive opportunity that such a crash and slingshot might represent, with a side benefit of STFU’ing the inflationist gold bugs once again.”

So have the gold bugs STFU yet? I am not positioned other than a couple odds and ends (literally two of them) after selling the GBRR.V buyout spike, and so I am not taking any pain (nor listening to gold bugs). But this weekly chart tells me that the final liquidation – mini(ish) or maxi – is in the process of playing out.

Here is the weekly chart, losing the support cluster from 2017-2019. Don’t read too much into the support noted in the 170s. There are several other targets in play that we have been managing in NFTRH. The chart is nicely oversold by RSI and I have to believe the follower bugs are getting hot under the collar at the leader bugs on twitter and other info-cesspools.

Today, while other areas of the market experience relief the miners do what they often do; go the other way. In the not too distant future that divergence could be meaningful. Not just for the still-bearish miners, but other sectors as well. The other thing to keep in mind is that when this mess does bottom, whatever bullish reversal comes of it, whether bounce, rally or new bull leg, is going to pack a lot of energy.

hui gold bugs index

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This Post Has 7 Comments

  1. GDX finally tagged up unfinished business here late today. That’s my only comment. No obvious good time window to point to for a local low except an obscure tie in to cycle 15 years ago. Not much to hang a hat on.

    1. Gary

      And that it is coinciding (roughly) with the goons next week? I like it.

  2. MikeC

    The one thing I can say, Gary, is reading your stuff at least has kept me (recently…!) from getting burned yet again on gold and silver. One day…maybe next Wed/Thurs.

  3. Bart

    Today and this past week, the odds of Gary’s preferred plan working out have certainly increased ….Do pm’s currently front run the broader market as they often do?

    1. Gary

      I would not doubt it, which could mean resumed pain in broad stocks before too long.

  4. After a good read on April high I’ve been haute garbage looking for a May/June pullback. Whatever haute takes that got me April and last Nov Aug June highs and September low is shot to hell.

  5. Gary

    We all run haute and cold.

Comments are closed.