The HUI will give us a pretty good general idea about the gold stock bull market. The GDX ETF also reflects the HUI very well. From the early 2016 bottom the HUI exploded in a wild ride up until about August 2016, before it imploded again down into the December 2016 bottom. I believe that this was just a correction, in an ongoing bull market that still has two major legs up to go. Waves 3 and 5 of a diagonal “C” wave. This should take the HUI well above any bull market highs, even though it could be a “D” wave bull market.
Wave 1 and two in Minor degree have already completed, so gold stocks should have no problem in clearing the wave 1 peak in Minor degree and the “A” wave peak in Intermediate degree. Somewhere along this path I’m sure we will get extensions and vertical moves, that the majority could not even imagine could happen. “C” wave bull markets are notorious for doing just that, and time will be the biggest factor, to make it come true.
We may just be, at the first wave in Minuette degree, so we have a long way to go. The Gold/Hui ratio is still in the middle of two extremes, and with a bigger number with the HUI, the ratio moves at a snails pace. Very expensive was about 3:1 and today this ratio is at about 6.29:1.
When the entire gold stock bull market has extremely bullish news with it, and when the 5th wave completes, then it will be important to see what the Gold/Hui ratio is at. The Gold/Hui ratio is just one contrarian indicator, as insider selling will be another. All other gold stock ratios will also show us ratios to the extreme expensive side. Until then, this bull market is alive and well.
When we do get closer to another extreme, I will increase my ratio calculations as now I may just do it once a month or so.