In this update on the HUI, HUI/Gold ratio we also noted that GDX had not yet filled its gap below 29. Well, now it has. Filled it yesterday and is probing down to support and the SMA 200 today, which is so logically the product of the Golden Cross having made it into the Goldbug-o-Sphere as a bull signal to get excited about.
Note also that the HUI/Gold ratio is still probing downward and now just a teeny above the December (reversal) low. That needs to hold. Period. Or we have a bad sector internal signal that may or may not imply a loss of the SMA 200 above, but it sure would increase the odds of it.
In general, the gold stock sector is now where we wanted it in order to have a buying opportunity. With the weakening fundamental backdrop lately and amid the recent resurgence of inflationary signaling (many bugs still don’t get that they should never include cyclical inflation as reason to be fundamentally bullish gold stocks) I am having patience before adding positions [AEM subsequently added on drop to its SMA 200] because even if the sector rallies as planned (but as part of the inflation trades) it would be for the wrong reasons.
The reason I am having patience is strictly a “man stares at chart” thing and when he does, he cannot ignore that gap around 22. Gold stocks never were special (copper stocks did even better) on the broad rally that itself is churning this week and if gold stocks resume upward after a “healthy” technical correction, we’ll keep that in mind until it either results in a (hopefully profitable) sell, or the proper funda reengage after Goldilocks and the little inflation surge happening today get kicked out of the house. That would be fundamentally better scenario to buy (on downside opportunities) and hold as an investment as Bob Hoye is calling gold miners now. Me? I’ll tap the breaks on that kind of talk until a lot of macro work is done. Q4-Q1 has only been a initial hint, and copper did better than gold at that!
A little lecturing there even as I had just wanted to update the daily chart.