From the Precious Metals video included with NFTRH 848 after gold stocks began making overbought daily chart signals:
We’ll probably see some volatility, some grinding…
318 or so, 318 is very important. It can flash below it but generally it should hold this [Dec. 11 high of 318.14]. A deeper correction, which I’m not expecting but should always be aware of the potential for would come down to 305. But either way it appears we’re on the next move in the bull market.
With the energy in the markets (Trump, Fort Knox gold hype, war talks, etc.) I would like to use the benefit of hindsight to improve the view of 305, which I had not “expected”, but certainly allowed for (within the still bullish bigger picture).
Here is an updated daily chart of HUI. First things first, however. HUI has not even tested the initial support at 318 yet. What I like about the lower support is all those touch points and the coincidence with the uptrending SMA 50 and 200. As to the short-term, daily RSI is fading its EMA 20 and MACD is triggering down.
I hedged again today, which I hope is not going to become a Friday ritual. I will also be prepared to un-hedge if whipsawed because it is a sector I am big picture bullish on.
By way of example, let’s look at KGC, which was one of the charts in the video update. The chart is untouched from the original video, as it is so simple. A normal correction, which we noted, would be to the point where clear lateral support meets the uptrending 50 day average. Another normal correction that would be more severe and come with a significant sector sentiment clean-out, would be where lateral support meets the uptrending 200 day average. Either way, it’s still longer-term bull ‘on’.
I hesitated before adding the hedge today because Treasury bonds are positive (yields down), implying disinflationary signaling. Deflationary market liquidation will one day be the best fundamental backdrop for gold mining. But often the transition to that is when gold stocks sell down, because… INFLATION bugs. Gold/RINF is a-okay, fundamentally as our guide for gold stocks.
Due to views like the above and the one below, I expect any correction – if applicable – to be a buying opportunity in an ongoing bull view for 2025. Gold is now not only trending up in global stock market terms, but hinting that way in SPX (US) terms.
Bottom Line
We anticipated an overbought gold stock situation to see grinding at best, or volatility, a couple weeks ago. After personally getting whipsawed a bit (these things rarely unfold per any given short-term timing plan), the situation remains the same; bullish big picture, both technically and macro-fundamentally, and subject to correction in the near-term.
