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« Gold Stocks Could Correct In One Week | Main | GOLD hits $750! »
Friday
Oct122007

Does the HUI trust Gold?

Like most gold bulls we are looking for another 100 points for the HUI, as we firmly believe that this market has a very long way to run.

However, as we watched gold put in a gallant performance yesterday we were a little disappointed by the performance of gold stocks which surrendered three quarters of what they had gained during the session. This raises the question of does the HUI trust gold or does it expect gold to take a breather. We are of the opinion that the breather will materialise but nothing is for certain however it does make for fascinating viewing.

When we look at the chart for yesterday we can see that the HUI gave back around 15 points yesterday to close just 5 points higher.
We can also see that the technical indicators are pointing higher but are very close to the top of their range.


The HUI Chart 12oct07



There could be more to go but then we are flush up against the ceiling. Does any asset class stay overbought on a continuous basis? We don’t think so but as the gold stocks increase in value we are happy to see our investment account looking healthier.

At this juncture we think it is best to be mentally prepared for a pullback. As a long term investor this will not present a problem for you but if like us you have taken some profits off the table then the cash is bound to be burning a hole in your wallet. Well we will try and be patient and wait for a suitable re-entry point to show itself and prepare ourselves for the England versus France semi final of the rugby world cup on Saturday.

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Have a great weekend.

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Reader Comments (5)

Hello ...if your woory for plAying whith France , stay calm because may be you have to play whit LOS PUMAS !!
And , we love English, for breakfast !!!
Thanks good bye !!
I like very much your page !!!

October 12, 2007 | Unregistered Commenterdaniel

What on earth is this "HUI" ?
I dont rely on contrived indicators---I rely on current price, price movement, knowledge of the world situation with regards to stability, and a little bit of 'gut feeling'
bobi

October 12, 2007 | Unregistered Commenterbobi

Right now, the only reason gold is moving up and down is because of the way the US dollar is moving, nothing else. The dollar has been falling hard, causing gold to shoot up without any problems due to speculative buys. As a result, the price of gold overshot and obviously overbought.

Next week should be interesting as we will be seeing more US economic data. We will likely see a mild pullback if the data is positive which is in fact, good for the US dollar. This also means, odds of rate cut becomes increasingly low for october.

If the Feds doesn't cut rate on October 31st, I'd expect gold to fall hard...a very possible buying opportunity.

October 12, 2007 | Unregistered Commenterpho

Daniel,

The Pumas have surprised everyone with their style of play and it is a pity that they are not in the final. Another nervous week for us though!

October 15, 2007 | Unregistered CommenterGold Prices

Bobi,

The HUI

This is an index of unhedged gold stocks. You can see its chart on Kitco.com at the bottom on the left had side of the home page.

On the right hand side you will see the HUI (just under XAU) if you click on it and open it you will see this description of this index:

'The AMEX Gold BUGS (Basket of Unhedged Gold Stocks) Index represents a portfolio of 14 major gold mining companies. The Index is designed to give investors significant exposure to near term movements in gold prices - by including companies that do not hedge their gold production beyond 1 1/2 years.'

There is also a list of the companies that make up this index.

Hope this helps.

October 15, 2007 | Unregistered CommenterGold Prices

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