Some notes about HUI gold stocks index

We are seeing a definite reversal in the price action of the gold miners in comparison to the action in the broader equity markets in today’s session. I am not sure of the reason but whatever it is, the result is that the mining shares are finally seeing a strong bid in comparison to the broader equity markets.As most gold mining shareholders have been all too painfully aware of by now, the mining shares have been lagging the broader market for the last 6 months or so now. Notice the peak last summer and the progression lower, particularly at the end of last year.Trying to decipher at what level the analysts have pencilled in the gold price when valuing these things is an exercise in futility seeing that the Fed threw everyone an enormous curve ball this week when they gave the green light to another two years of zero interest rates. Obviously, that is strongly bullish for both gold and silver which are poised to go out on a very strong note this week.
The problem has been the mining shares in general which kept underperforming. After yesterday’s lackluster showing, I was cautious about the HUI failing to gain any ground after making its high on the open. Today however, those bulls which seemed so hesitant to push them any higher, are obviously having second thoughts and have stepped in much heavier with the result that they took out the previous day’s high and are keeping these miners well bid through the session. Apparently we are seeing a revaluation of the shares now that the FOMC has changed the playground rules.
If this sort of buying continues heading into the close ( and I am closely watching to see whether it does or not – so far it is very strong), the HUI will close at its best level in 6 weeks. It has even managed to turn the short term moving averages (10 day and 20 day) higher while it remains well above the 50 day. That is a nice turnaround from yesterday. The buying has taken the index exactly to the 100 day moving average. That will keep the index on a strongly bullish footing if it succumbs to the bulls.
Author:  , specialized in trading commodites like gold & silver

Receive these articles per e-mail

Subscribe for the free weekly newsletter and receive 3 papers about physical precious metals investing