This is just a friendly reminder about how bloody important it is for
the HUI-Gold Ratio (HGR) leading indicator (to the precious metals
sector) to maintain its higher lows status.
Yesterday the goons apparently attacked ‘paper gold’ (according to
sources who stand on guard for this stuff) after the HGR had become
weak. A pleasant thing happened however, as the HGR did not buy the
take down in nominal gold. 2 Hour chart above.
Thus the critical higher low to last summer’s low remains in place despite a savage day yesterday. Daily chart above.
Which allowed HGR to maintain itself well above the critical ‘Armageddon 08′ low. Weekly chart above.
Which itself was a higher low to the kickoff of the secular bull
market in 2000 (in nominal HUI, not this ratio). Monthly chart above.
The HGR does indeed look lame over the big picture, but as long as
the higher lows are in place and as long as macro fundamentals (e.g. the
real price of gold) are in place the above is a view of a buying
opportunity, as pained as it is to endure for those already all in.
It is a view of opportunity as long as we do not get violations, so
you can see why it was a little unsettling when the ratio began to
waterfall (by the 2 hour chart at top) into what we now assume was a
well coordinated hit (in line with the terrible CoT data noted in this space a couple days ago.
It’s all in good fun I suppose. At some point the goons will be
behind us, as will this accursed noise about the Fiscal Cliff ™ in which
markets are finding the latest emotional obsessions. Indicators like
the HGR quietly whir beneath the surface and while it got hairy the
other day, it remains unbroken.