Since the 2011 peak gold stocks have been grinding downward until early 2016, when suddenly gold stocks exploded and soared until mid 2016. Now the HUI is grinding sideways for over a year, but I think there is at least one more leg up to come. This 2017 sideways action shows up in many of the other gold stocks related ETFs so it’s not an isolated pattern at all.
At this time I’m working gold stocks like a big Primary degree triangle, but that will have to be adjusted if gold stocks don’t break out of their slump that they have been in. I also looked at the ABX (Barrick) stock, which does not show this pattern, but it showed a very nice zigzag correction already completed.
I just can’t see Barrick’s stock soaring while all others are left behind so for now I will remain bullish until this HUI clears a new record high with a “C” wave bull market. “C” waves can produce some stunning moves. Barrick also contains a Wedge or inverted Megaphone, which can be powerful signals, before the trend turns again.
We could even be heading to a “D” wave peak, so the bigger gold bullish phase is not over yet, from my perspective.
The Gold/Hui Ratio is sitting at 7.60:1 which is more expensive than the 3:1 ratio, I have recorded. Cheap is about 10:1 so we’re not that expensive when we use gold as the measuring tool. In zigzags the “A” wave crashes can be very straight, but then the “C” wave is choppy and travels at a slightly different angle.
In a flat type of a pattern the leading “A” wave can be very choppy, but then the trailing “C” can explode, or implode with a sheer vertical drop, depending on what side of the market we are on.