Hump-Day Charts, Updated with Commentary
Gold is creeping up to the mainstay resistance trendline, in force since mid-April originating at its ATH in US dollars. Note the chart is now spot basis and not rolling futures contract. My guess is the downtrend line will be heavily defended. Gold over $3400 has been whack-a-mole'd quickly and then pushed deep into the $3300 handle territory. Should Gold close over $3450 spot basis, that just might be the trigger for a vigorous test of the ATH at $3500. Daily Gold movements have been largely driven by the US dollar and by proxy the US dollar Index (USDX). I have seen very little evidence the physical market is taking charge of Gold since earlier this year.
The real inspiring trade action is in the mining shares. The HUI just breached 500 and has really roared higher in August despite the general stale mate between Gold traders. I have been posting the HUI/Gold ratio since mid-2022, moaning about a 19-year Bear market in mining equities. 2025 is the year the Bull fully removed the teeth of the Bear. In May, the ratio hit a low of 10.9% and has since rallied to 14.7%. This is a 35% increase in just 4 months! This abrupt rise is due to NEW money entering the sector and not us choir boys trading chicken scratch.
I have been using Gold Royalty as a proxy for this sector money flow. Gold Royalty is a small company in its sector. One would think GROY came out with great, earth shattering news for its 128% rally from its lows in May? Nope. The only reason I follow Groy is due to the 20 cent warrants I bought last year. Their revenue, earnings and cash flow are in my mind quite pathetic. The revenue growth is to be the highest in the PM royalty sector to 2030. Tiny revenues multiplied by 300% are still larger, tiny revenues. Additionally, the long-term growth news has been known for over a year. My firm belief is NEW, unfamiliar money began pouring into the PM royalty sector in May. Royalty plays are known to have liquid trading and have the lowest risk profiles of the entire sector. They are really a way to attract skittish capital to the sector.
The US dollar is bottom bouncing on a support trendline. What is notable is a powerful downtrend and the support line are projected to intersect in the next few weeks. Foreign Exchange traders are hugely chart technical traders. The penetration and close above or below their respective trendlines will have huge ramifications for trader positioning. Even more important than the short term implications, I post the 5-year USDX chart. There's an important long-term support line just underneath the present level. My guess it will be Friday, September 5th employment report will be the lit fuse for a US dollar Bull or Bear move. Since Gold and the $Buck finished couples counseling in mid-July and have renewed their inverse relationship, a definite employment miss or beat is going to have major implications for Old Yeller.
Gold - Short Term
.
.
Silver - Short Term
.
.
HUI - Short Term
 .
.
HUI/Gold Ratio
.
.
Gold Royalty (GROY)
 .
.
US Dollar Index - Short Term
.
.
US Dollar Index - 5 Year
Credit to tobinator00 |
