This is just a friendly reminder about how bloody
important it is for the HUI-Gold Ratio (HGR) leading indicator (to the
precious metals sector) to maintain its higher lows status.
Yesterday the goons apparently attacked ‘paper
gold’ (according to sources who stand on guard for this stuff) after
the HGR had become weak. A pleasant thing happened however, as the HGR did
not buy the take down in nominal gold. 2
Hour chart above.
Thus the critical higher low to last summer’s
low remains in place despite a savage day yesterday. Daily chart above.
Which allowed HGR to maintain
itself well above the critical ‘Armageddon 08′ low.
Weekly chart above.
Which itself was a higher low to the kickoff of the
secular bull market in 2000 (in nominal HUI, not this ratio). Monthly chart
The HGR does indeed look lame over the big picture,
but as long as the higher lows are in place and as long as macro fundamentals
(e.g. the real price of gold) are in place the above is a view of a buying
opportunity, as pained as it is to endure for those already all in.
It is a view of opportunity as long as we do not get
violations, so you can see why it was a little unsettling when the ratio
began to waterfall (by the 2 hour chart at top) into what we now assume was a
well coordinated hit (in line with the terrible CoT
data noted in this space a couple days ago.
It’s all in good fun I suppose. At some point
the goons will be behind us, as will this accursed noise
about the Fiscal Cliff ™ in which markets are finding the latest
emotional obsessions. Indicators like the HGR quietly whir beneath the
surface and while it got hairy the other day, it remains unbroken.