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This guy is not a perm-bull and he’s been dead on-well worth the subscription price

Posted by Richard640 @ 12:32 on January 17, 2015  

Complimentary eLetter from Biiwii.com & NFTRH.com

HUI==MACD is zero +, RSI above 50 and AROON is on an uptrend. HUI is now in intermediate rally mode.

Bottom Line

HUI is establishing an intermediate uptrend and a ‘buy the pullbacks’ regimen. In order to be firm on this, we need the real (not as imagined by too many gold bugs over the last 3 years) macro fundamental backdrop to engage. It is engaging, but not yet complete.
From the last eLetter date 1.11.15:

“HUI closed the week at a higher high to November and this can only be considered constructive. HUI now remains in intermediate rally mode (higher highs and higher lows) even if it loses what is very tentative support at 180 and even 170. Only a drop below the mid-December low would neutralize the rally potential. It has not broken above the channel so unfortunately, the 150’s are still possible within rally mode.”

HUI broke the channel to the upside and we are firmly in intermediate rally mode, without the lower channel line there to haunt the proceedings. So where are we at with the gold sector and in the mirror, the broad US stock market, for that matter?

US stocks are a mirror to the gold stock sector because they are cyclical, a trait by which they benefited through the recent post-2012 cycle of unquestioning belief and confidence in policy makers, notably the US Fed. Our thesis for the gold stock sector has all along been one of counter-cyclical orientation, and a bullish stance on the gold sector would demand a return of a proper fundamental backdrop. That appears to be in process, though not yet confirmed on all cylinders.

The daily chart of HUI shows a break up from the channel on Monday and then a normal and expected correction (NFTRH+, a free add-on to the NFTRH service, advised a buying opportunity using the GDX ETF in real time on Wednesday) to test the breakout above 180. The target for this leg of HUI’s rise is 210, but targets are not stop signs, they are simple measurements in most cases.

MACD is zero +, RSI above 50 and AROON is on an uptrend. HUI is now in intermediate rally mode.

Of course, this would be no different than previous bear market rallies unless the fundamental backdrop comes in line. And while it may be confusing to ‘inflationist’ gold bugs, our constructive stance on the gold stock sector depends on global economic contraction (including the US) for a best case scenario. The best way to measure that is using the ‘real’ (commodity adjusted) price of gold. Here is the weekly chart NFTRH has used to keep subscribers abreast of the progress.

When counter cyclical gold out performs cyclical commodities the indication is not good for the global economy. Why do gold miners benefit? Because their product rises vs. many of their cost inputs. Look no further than the Gold-Oil ratio.

There are so many fundamental and technical details that will go into successfully managing the precious metals in the coming months and years, but the above gives a summary for you.

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Post by the Golden Rule. Oasis not responsible for content/accuracy of posts. DYODD.