Does the HUI trust Gold?
Friday, October 12, 2007 at 08:10AM
Gold Prices in 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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