There is an eerie stillness at the moment as the HUI slides sideways constantly teasing her onlookers. I like to put it down to the August vacation period but that seems to be a little simplistic. After all not every nation on the planet goes on vacation at the same time, in fact some countries operate on a totally different calendar to that of the western world.
Looking at the wedge formation that is forming in the chart for both gold prices and the unhedged gold mining HUI index, it looks to us that we are close to a convergence that will result in an upward breakout. Gold as we have just witnessed can move in the opposite direction to what would be normally expected. Whether this is due to the theories that GATA put forward or not, we don’t really know. But we would expect gold to move upwards when we have a terrorist threat unfolding as we do now.
For the moment we are watching the situation while researching other opportunities in this sector. Many gold mining stocks appear attractive but the timing or their particular chart does not scream buy, buy, and buy, to us. So for the time being we are sitting on the fence waiting for the bargains to identify themselves.
11 August 2006