Gold Wipe Out Highlights Unbiased Risk Management

The damage in the precious metals began back in November when the critical 460 support level was broken on HUI.  Anyone who did not acknowledge that the violation of this level (the neckline to the 2011 topping pattern) was important – or as NFTRH called it “abnormal” to a bullish case – was looking through rose colored glasses.

After that came a bottoming attempt, a failure in January, numerous bottom calls from around the gold analyst spectrum and a series of bear flags that served to reset over sold status just enough to fuel each new plunge. Continue reading "Gold Wipe Out Highlights Unbiased Risk Management"

HUI-Gold Ratio; 3 Views, 1 Conclusion

Here is a little snippet from NFTRH 213 that showed the important indicator of gold sector health, the HUI-Gold Ratio (HGR) from three different views; daily, weekly and monthly.  As you can see, daily must hold to keep the weekly intact, which in turn must hold to keep the monthly big picture of the secular bull (for the HUI, not this sad looking ratio) intact.

This is a difficult sector to own and indeed these charts say it is best to trade the stocks regardless of what one does or does not do with the bullion.  But the conclusion is that until the HGR breaks down to a lower low, the current situation is viewed as a buying opportunity.  On the other hand, HGR will serve as a handy risk management indicator if it should unexpectedly collapse.  From #213: Continue reading "HUI-Gold Ratio; 3 Views, 1 Conclusion"

Updating the HUI-SPX Ratio

There were reasons for the mind numbing gold stock correction out of the hysterical events of the 2011 Euro-led meltdown and its aftermath.  Take your pick…

  • Too many lousy gold mining operations not keeping on top of costs and/or execution projections.
  • Too many scammy smaller operations doing little more than issuing stock and telling stories needed to be weeded out.
  • Over bullish sentiment was that this time the gold bug true believers really were going to take Hamburger Hill as Europe’s implosion would be taking down the rest of the civilized world.
  • Highly strategic yet indirect manipulation of the gold miners’ product – a barbarous relic not welcome in an economic discussion by today’s monetary policy setting intellectuals – by a very overt (publicized) manipulation of the Treasury yield curve in Operation Twist.  I will spare you another chart of gold’s correlation to the curve.

There are more reasons, but now is a time for planning for what comes next.  Not crying over spilled nuggets. Continue reading "Updating the HUI-SPX Ratio"