HUI, XAU & Gold keep a chuggin' along - headlong into the USD rally.
...so much for Gold & Goldstocks being married only to US Dollar weakness, or for that matter... to interest rates, or inflation.
International Currency Players are transitioning to Gold as a Currency.
The New High for Gold in Eurodollars is a VERY significant endorsement of that.
Give Credit where Credit is due... James Sinclair has long pounded the table on this coming Transition Phase and a corresponding march to/thru $500 POG.
- I see no reason why Gold should not and will not make a run to/thru $500 by year end and some of my chart work shows we very easily could and should see a new leg of the Gold Bull ultimately take us to HUI 335-350 within 12-15 months with no new lows in the cards.
- what price level of Gold will be required to do that ?
Who knows ?
Using conservative 2:1 traditional leverage in the Goldstocks to Bullion:
- if Gold moves 15-20% above it's earlier highs - and given the Transition I and many others believe the Gold market is undertaking - that hardly seems like a "Blue Sky" Irrationally Exhuberant Upside Target. Then the HUI should correspondingly move 30-40% higher than it's former highs and that would give us a Target of $525-$550 POG and a corresponding HUI of 335-355.
That is my take on where we're going.
Timeframe's are always unpredictable; especially in a market where Greenspan & the Fed are hyper-interventionists, stabilizers, or manipulators...choose your favorite term.
Many will argue that the Fed will do everything in its power to stop the Canary in the Coal Mine Nature of $500+ Gold from occuring...but, imho; the Fed has backed itself into a corner and Greenspans hands are tied (no conundrum)...and the Global Currency Players bring enough Ammo to the Table that they can go toe to toe with the Fed...in a degree that traditional Gold Bulls never could.
...call it the "Sinclair-Stage" of this Gold Bull.
And concerning the Human "Canaries in the Coal Mine" -
What did Stephen Roach say ?
...less than a 50:50 chance of the US not encountering a systemic meltdown.
Paul Volker said that in his lifetime' he's never seen greater risk, or more serious financial imbalances...and he doesn't expect it to end well.
Robert Rubin just endorsed all of the above.
From Bill Gates, to Warren Buffet... massive US Dollar Short Positions still abound.
Derivatives have exponentially increased since LTCM.
The EU cracking... now Italy is decrying the Euro...
Greenspan claims to have reached a "conundrum" vis a vie falling 10 Year Rates ...as Great Britain, Australia, New Zealand et al are already inverted...Germany has their highest unemployment levels since WWII.
And the China Re-Peg still lies ahead ...
panning4gold;
re: ["Slider, Steve Saville is still yapping about HUI 120-150 towards the end of the year. He doesn't think that the gold bull can really get started until Greenspan stops raising rates. I have also heard Jim Puplava say that Greenspan is not going to stop until something breaks. Is Greenspan really that dense? 2000 wasn't that long ago"]
p4g - I don't understand how anyone could fail to act upon the max divergence ratio between Gold & the XAU/HUI that we just saw ?
That is amongst the best back-tested Trades anyone can EVER make in the Goldstocks - period !
- it holds up - as a stand alone trade.
Unless Saville & those who were calling for much lower lows; saw something out there that was going to lead Gold Prices immediately falling off the cliff... I simply do NOT understand how HUI 175-165 could fail to be a STRONG BUY Call from the Gold Guru's ?
I think most of the Gold Guru/Pundits who missed this entry/trading opp either discarded ALL of the Fundamentals and went with a 100% Pure Technical Call...or, Fundamentally; they did not believe that Gold could rally into a rising US Dollar and believed that Gold was going to rollover and tank into a Strong USD and that the Goldstocks-HUI/XAU would have another wave down to the HUI 125-150 level.
HUI 125-150 was not irrational - IF GOLD the Metal followed the Stocks and rolled over... but, it hasn't and Technically it never showed that it was going to.
Quite the Opposoite imho; as the underlying Fundamentals for Gold are as strong, if not stronger now... than they've ever been !?!?!
I remain unconvinced that ANYTHING can be profitably traded over the longterm - purely on Technicals....and I think for the majority of the non-believers here - it was purely technical call.
I always try to take an unemotional look at all 4 Major Components of a Trade (Fundamentals, Technicals, Sentiment & Valuations) - those being Gold's underlying Fundamentals, the Technicals for both GOLD & the HUI, Investor Sentiment and Individual Stock/HUI/XAU Valuation levels...and the one component of those 4 that I am most often most profitable in trading against - is the Technicals.
But, often I wonder what TA these people are using ?
Those married to just one Technical School of Thought such as Elliot Wavers...or Point & Figure, or some Noveau Methodology... I can't realate to & usually immediately dismiss.
Take the E'Wavers... if you have a room of 1,000 E'Wavers and show them a Chart... you'd get 997 different interpretations.
- is it a 3 of a (3) Up, or Down; or a (b) of a (3), or a (3) of a (b) !?!?!?
I mean C'Mon...(vbg).
On this recent HUI blow off... it was like basic Reading - ie: pretty fundamental.
1. We were in the midst of a significant Goldstock Captitulation. The Tape was Brutal & Ugly and everyone saw this & acknowledged it and SENTIMENT most assuredly reached extreme - Contrarian Alert Levels.
2. HUI:GOLD & XAU:GOLD valuation ratio's reached extreme peaks...triggering a VALUATION Buy Signal.
3. The FUNDAMENTALS for Gold were still solid...and Gold still Technically remained in it's longterm Bullish Trendline.
4. TECHNICALLY - for the HUI stocks we had a classic Descending Triangle Formation... the prior lows of HUI of 163.81 from last May should have been the absolute potential lows...and that held as we never closed below 166.
5. We then needed the CONFIRMATION of 3 closes above HUI 178 ie:
Message 21361840
...and we got that.
So as far as how I see it... now confirmed; we need to give the HUI a little line and let it run at least back thru the 200 dma of 208...and then raise stops and take the trade off - if/when we break back below the 200 dma - because then - new lows are most likely in the offing... but; we'll have 35-40 Indice Points and some 30-40%+ moves in individual stocks in the Cash Register.
And if we don't fall back below the 200 dma... then I'd wait untill we reached extreme multiple readings in the RSI's, MACD's, Williams % R, Stoch's and whatever TA Combo you favor...before taking the trade off and pocketing profits.
- give the HUI some line and let her run to/thru that 200 dma to see if we've got a keeper on the line, or just a nice quick, solid trade.
No one get's every leg of an entire Cyclical Move correct; so I am not bashing Saville, or Tim Wood, or anyone for calling for lower lows... and some of them have timed their calls for the end of the Summer, or later this year... so they aren't wrong yet as far as an ultimate, interim cycle bottom may be concerned.
...but, I think they can be criticized if their call misses an interim bottom/trading opp of 35-40-50+ Indice Points and with some Individual Stocks - especially the Small Caps & Junior/Explorers moving 40-60% in some cases.
In that respect... they left a lot of money on the table...but, traders also still have to time taking those profits near the top of this leg if we do rollover and go to lower lows... in order to have been right as well.
...so we will just have to be patient and wait & see.
In the mean time... I'm pocketing a few chips in stocks that really broke hard & fast like Drooy, a little GSS etc....and I have cashed in most my nearterm "calls" that were for a levered trade.
I like to rotate some of that profit-taking money back into fundamentally strong laggards that aren't quite as well known among the Mo-Mo Trading Crowd...and as always; I put a little back into Cash... but, I'm still holding the vast majority of what I bought as I think at the least - we should move back over the HUI 200 dma if the Rally is for Real and this was an interim bottom.
200 dma on the HUI was/is about 208... so that will be about a 40 Point Indice move for 25% on the HUI... some double/triples on options and 40-50%+ in the High Beta-Leaders.
That is a significant Trade.
If we reach the 200 dma... then I think we can pound our chests like a good Silverback Gorilla should... and then this will have been a "Call" that beat most of the well known, longstanding Gold Guru's at their own game... not that many of us haven't been doing that for some time now anyway (vbg).
Technically I still see the next leg of this Cycle taking us to HUI 335-350...and the Fundamentals are there - so; how high - is high ?
...POG's only at something like what ?... $175 in 1980 $ adjusted terms ? |
