We can replace the HUI with GDX as a gold stock indicator, as GDX tracks the HUI very well. It is also easier to figure out the Gold/Gdx ratio. Since early 2016 gold stocks have seen an explosive rally, but also got hammered in a summer type of a correction. This correction can contain an expanded pattern which, if it is true, then gold stocks should have no problem in breaking out to new bull market record highs.
Depending on the speed this progresses, we should get close to the top trend line one more time. This is still a substantial move. I visited my contrarian friend who manages some large accounts, and we both are in agreement that there is a lot more upside to go. Not until we get some clear gold stock insider selling reports, and GDX becomes very expensive when we use the Gold/Gdx ratio, this bull market is not going to end anytime soon.
The next phase is off to a good start, but is still hazy to the degree we are now in. This may not clear up until we see a sudden drop, otherwise gold stocks can just keep grinding along, as they have done already.
There is no way I can be bearish with such a pattern even though the Gold/Gdx ratio got a bit more expensive recently.
Today this ratio is sitting at just under 50:1 from a maximum cheap ratio of 84:1. We would have to get close to 30:1 or more before gold stocks become very expensive again. This is not going to happen overnight so be prepared for a long ride mixed with some surprises along the way.
As you can see my next target wave position at the next top is another “A” wave in Intermediate degree, so hopefully we can milk this run as much as possible.