- Gold/HUI
ratio chart flashes 'BUY' for HUI
- HUI approaching very strong support
Excerpt
The Gold Drivers Report
The HUI faced a severe sell-off last week and is trading now as if gold
were trading at $650 levels. Such huge anomalies never persist for a long
period of time so what gives, or we should see a sharp decline in the gold
price or the HUI will catch up sharply from here. We've been through all this
before in August of this year. The HUI was trading at levels as if gold were
trading at $550. The HUI was a screaming 'BUY' at
that time and rocketed all the way up from 300+ pts towards it recent high of
460. (see a also my piece 'HUI - bottomed out,
poised for take off!' of September 03).
As said above such anomalies never persist for a long period of time.
The Gold/HUI ratio chart is an excelent indicator
for such anomalies and flashes a 'BUY' again these days. Let's take a peek at
the Gold/HUI ratio chart first:
The Gold/HUI ratio chart flashes a 'BUY' again indeed. Again, the
Gold/HUI ratio chart points to severe anomalies between gold and the HUI.
This becomes clearly visible when we plot the charts of gold and HUI on top
of each other.
Again we see the severe anomaly between gold and the HUI. The HUI
sell-off therefore seems to be way overdone and generates a unique 'BUY'
opportunity here. Now let's take a peek at the HUI technicals
and see what they say:
We see here that the 395 - 400 support area didn't hold and that the
HUI has approached a very strong support area in the 360 -370 range. The 360
- 370 range has served as a long-term resistance for more than 16 months and
serves now as strong support indeed! Furthermore it should be noted that the
HUI is pretty much over-sold so further down-side risk seems almost non-existant.
Sure enough the nearby future of the HUI depends on the nearby future
for gold so let's take a peek at the gold chart below:
In fact nothing has really changed, no uptrend has been broken and
the current AB Flag formation simply has to resolve itself one of these days.
If it can resolve itself to the upside then the HUI is in for a spectacular
move to the upside.
Now where to go from here?
If you are a believer in gold's future then these are the time to
increase your gold share positions since the gold shares are still selling at
fire sale prices. In other words, downside risk is low. Higher gold prices
the years ahead will lift the entire gold share sector but the most exciting
rewards will come from junior mining companies making new discoveries.
Here at golddrivers.com we track promising junior companies which we
believe could be huge winners before this decade is out. If you would like to
participate you could opt for a free trial
subscription
The Free trial includes all GOLDDRIVERS modules like Discovery News,
Charts, TOP-20 Favourites, Break-out ALERTS and GOLD/HUI analysis.
Best regards,
By :
Eric Hommelberg
Editor, the Gold Discovery Letter, the Gold Drivers Report
www.golddrivers.com
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