As investors who are totally invested in the precious metals market with nothing at all in the mainstream sector we tend to regard ourselves as having a contrary viewpoint. So according to the dictionary we are opposite in nature, altogether different and are inclined to oppose stubbornly.
And I thought that we were such agreeable people!
So despite everything that we have read recently about how high gold prices are going we are also aware that nothing goes up in a straight line, there are pullbacks along the way. We are of the opinion that this is one of those times and have taken some money off the table. However we are not that brave that we would step out of this bull market in gold completely. No that is possibly the biggest mistake that we can make at the moment but we did decide to move some cash to the sidelines with the view to re-entering the market at cheaper levels. Should this not eventuate then we will have to bite the bullet and return at a higher cost to ourselves.
This leads us to the issue of the HUI (the index of basically un-hedged gold mining stocks) and is it correcting or not? Will we get a sufficient down turn to make it worth the risk? Well the chart of the HUI does appear to indicate that the magnificent 100-point rally has run out of steam. And as we have said previously we are small enough and ought to be quick enough to trade this situation, however, time will tell! We can see that the HUI has lost about 18 points since hitting 400. We also note that the RSI, MACD and the Stockastics have turned and are heading south.
Gold and silver have started well today but they do have a habit of hitting New York on a high only to head south and finish lower by the close of trading. Also remember that the HUI does not always follow gold up although it is true for most of the time. Having taken some money off the table we can only observe how this situation unfolds and prepare to pounce back in when the moment presents itself.
Have a stubborn one.