Tag Archives: Gold/HUI ratio

HUI 2011-2018 Update

 

The HUI is just an index of gold and silver stocks which has been in a bear market since the bubble mania peak in 2011. All commodaties are in diagonal wave structures where normal stock market wave counting will not work. The 4th wave rally in Intermediate degree is a bear market rally and this will get confirmed when the HUI crosses below the 100 price level, which is only 35 points lower from today’s price levels.

The Gold/Hui ratio is at 8.85:1 which is getting very cheap when we use the gold price as money.  I have records of the HUI as 10:1 being an extreme cheap ratio, but I would expect a much bigger extreme to still show itself by the end of this year! I can still stretch the time to early 2019 if need be, but then gold can be bullish well into early 2020 after which the HUI will suffer the biggest decline ever.

Any “B” wave top will also be the last time that we can unload gold bullion, because gold could suffer a $1300 price crash lasting well over a year or more. Deflation is the real threat and the gold market is the clearest example of what happens when deflation sets in. Even the HUI has a triangle in it so this has been very common in all gold stock related ETFs. I’m using GDX and GDXJ as my main trading ETFs but added options (PUTs) in August, which can turbo charge the returns.

One month experience does not make an expert, but by the end of this year I will be forced to sell all my PUTs after which, I will look at the track record as a new cash base will get established.

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HUI 2011-2018 Bear Market Update!

The 2011 peak was a 30 year gold/silver mania peak that has still to finish the first set of 5 waves down in Intermediate degree. They are connected with zigzags  like “All” commodities are, with our last “B” wave in Minor degree already completed. The “C” crash bottom will be the last one when it finishes sometime towards the end of 2018!

It also means the angle of the decline will also increase as the HUI still has to fall below the 100 price level, to confirm that our present bullish phase was just a big bear market rally. It was only an Intermediate degree at the 2016 top, so any future “B” wave in Primary degree has to exceed the 2016 peak by a wide margin.

This anticipated “B” wave in Primary degree will be the last and final chance to unload all gold stock and bullion investments. I always work 3 steps ahead of the crowd, which I have been doing for decades already, as it is the quickest way for me to catch mistakes at the earliest time.

Those who are not ready by the end of September will be late, and as it takes major planning to reverse once the bottom is near!  I will use $5000 as my USD model account and have sacrificed about $500 CAD with 10 Puts on GDX (100 shares per PUT) which expire by September 18th. I will take any green offerd to me at that time but the pay back will all be on my CAD side.

This is all good as I also get to build up my CAD side as well as my USD side. As of this morning all my accounts are in the green! Which is a good thing, right?  🙂

 

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HUI 2000-2011: Another “C” Wave Bull Market?

 

This wave count is different than anything I have publish as I changed the 1980 peak and the 2000 bottom in the HUI is a Primary Degree “B” wave bottom. Before readers freak out and think this can’t happen, then you don’t know the diagonal wave structure. The entire commodity Submillennium wave 5 sequence is diagonal based. Evidence of that fact also shows up in the pre 1920’s of the DJIA as for 300 years or more the entire world was based on commodities, with coal being the main low cost energy source that built all early England and America. Of course the rest of the world also benifited. The Roaring  20s is when the stock markets invented other financial instruments to invest in, after which the DJIA no longer acted like a commodity.

I though long and hard already about the “C” wave bull market, and I’m very confident it will not do any damage to my present Cycle degree wave four bear market.

What it can change is wave 5 in Cycle degree as it may also be another huge zigzag bull market. The entire world of wave analysts are stuck in impulse mode, as they count everything that goes up as an impulse. Trying to force 5 waves into a bull market like all the experts do, goes against my grain of not forcing wave counts.

I will slowly switch all my gold and silver ETFs to a Primary degree “C” wave peak for 2011. If we do some quick math then this Primary degree zigzag was 31 years long.  I already made up a gold wave count containing a zigzag in Primary degree but I will not post it for a little while longer.  All my work is between Cycle degree wave positions, which is a minimum of two degrees lower than the rest of the waver herd in the rest of the world. Cycle degree comes before any SC degree can happen, so if I’m wrong I will be the first to know about it as well.

I also calculated another Gold/Hui ratio today, which was about 7.3:1. This is only a little cheaper than the April, 1, 2018 ratio of 7.05:1.  A cheap Gold/Hui ratio would be around 10:1.

 

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HUI Gold Stock Index Review

Each gold stock related asset class has slightly different wave patterns, but this HUI chart is also forced into a wedge, even though the wedge is a sideways pattern. That actually may be the scariest part of this setup! The HUI has a long way to go to catch up with gold, which as the experts say gold stocks will catch-up to gold in due time. I’ve heard all that before at the 2011 peak and it never worked then and it sure will not work this time.

In order for this HUI index to be in the bullish phase already then that 2013 low,  must “not” get breached by the slimmest of margins, otherwise the HUI bear market is still in progress.  The 150 HUI price level would trash that 2013 low by a wide margin, which would confirm that the bearish phase is still running.  The top trend line is the main trend and the HUI would have to bust out of that range as well. What’s next HUI 150 or HUI 225?

The bottom rising wedge can be used because the HUI is still in a small rally.  It would take very little effort to break that bottom rising wedge, so this HUI needs to send us a clear direction sooner or later. This Micky Mouse move is just not doing it for me.

In 2008 Gold, Gold stocks and all related oil futures crashed right along with the stock market so, saying that it is “Different this time”, may not work as well!

Gold stocks heading north, while oil heads south would force the Gold/HUI ratio to change in a very short time. The Gold/HUI ratio is sitting at 7.24:1 which is about average, but I think it has been hitting a ratio brick wall, since April, 1, 2018.

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HUI Gold Stock Correction Review: Will It Ever End?

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.

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HUI Gold Stock Index Review


At this time I’m trying a different wave count for the 4-5 year, HUI bear market. If I constantly start having to use the smallest degree on my list of 15 degree levels, then I know I may have to increase my degree level by at least one degree. I still have three degree levels left, so there is lots of room to extend with.

What I see in the HUI is a potential running flat. There is some downside wiggling room left, but in the long run this gold stock bull market is not finished. A running flat is extremely bullish and from its base it can soar in a stunning fashion.

At the 2016 bear market low, the majority of analysts were bearish. When the consensus is bearish, and the forecasts for conditions to get worse are constantly hammered home, then ask yourself, “Who is left to get out”?

The reverse happens at any major top. When the consensus of expert analysts, paint us a rosy picture for the future of gold stocks, Ask yourself, again”Who is left to get in and buy”?  At a bull market top, you have analysts shouting to the rest of the world how great the gold stock bull market is going to be. Yet the HUI crashed and burned for close to 5 years.

My saying I like to use is, “market bottoms are the breeding grounds for bull markets, and bull markets are the breeding grounds of bear markets”.

My point is that the resource markets are cyclical and if you ignore this fact, you will miss every bull market that comes along.

Rick Rule – Resources: Bear Markets are the Authors of Bull Markets – YouTube

Rick Rule understands the cycles in the gold markets, and this short 10 minute video is important to watch.

Right now the Gold/HUI ratio sits at 7.10:1 from a base of 10:1. We would have to get closer to 3:1 before it starts to get very expensive.

At this time 2018 sure looks like it could be a banner year for gold related assets.

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HUI, 2000-2017 Gold Stock Review

 

Many of the other gold stocks related ETFs and indices have very different wave counts. Some look more bullish while others look far more bearish. This is what diagonal wave structures can do.  The 2008 crash was not a surprise event as Steven Jon Kaplan had short positions on GDX and I tried shorting GDX as well, but got forced out several times before I gave up.  The 2008 crash showed that gold stocks “AND” the general stock markets can crash together, at least for a short period of time.

The angle of the 2008 crash assured the contrarians that another bullish phase would happen. The HUI took its sweet time about it because it sure looked like another zigzag in a bullish phase. Gold stock insiders were selling again at the 2011 top, while stock market insiders were buying across all indices that I cover. 

Sure enough, by the 2011 top the stock mania was ready to fly as gold stocks imploded in a long 4 year bear market. From the 2011 top which I use as a Cycle degree wave 3 position, the gold stock markets displayed what looks like a set of 5 waves down. Due to the diagonal nature of the decline, there could be a single zigzag during the 2013 sideways correction. 

In early 2016 the HUI hit a bottom with about a 10:1 Gold/Hui ratio from an expensive ratio of 3:1. Today the Gold/Hui ratio is 6.45:1 which is shifting a bit towards the expensive side, but it will take much more than that to kill this gold stock bull market. Not until we see a sustained expensive Gold/Hui ratio and reports of gold stock insiders selling again, will this bullish phase be ready to pop one more time. 

Even now gold stocks are not displaying a great looking potential “C” wave bull market, so we have to expect some wild moves that may surprise us. 

I show three trend lines,  and the peak of the center trend line could be closer to reality than the top trend line is.  Technically speaking, I would love to see that 2016 HUI top,  get completely retraced. It is one of the ways that will help confirm that we are still in a bullish phase correction. 

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HUI Gold Stock Review

I looked over the Barron’s gold index before I looked at the HUI. They both do not give me any great clues as to the potential location we may be at. That 2016 low was a major low as all the gold/ratios have confirmed. The 2011 to 2016 gold stock bear market fits into a 5 wave sequence better than any other sequence, so it can put us into a potentially large degree zigzag. It would also mean that no new record high can happen as zigzags cannot go above their starting point, of the correction.

I’m not happy with the HUI pattern between the February 2017 top, to the July 2017 bottom. It does not fit well into a wave 2 correction at this time. Worst case we could be heading up a “C” wave leg, which cannot break out into new record highs. Instead of a 1-2 wave count we could be in an “ABC” count just as easily. Any trend lines that I do have are there to try and box the pattern in, but at times that works about as well as trying to lock a herd of angry cattle, into a corral.

There are at least 3 other gold stock related ETFs with this same type of a pattern. In the long run I’m bullish as any Gold ratios are not anywhere near any extreme at this time. Besides, no gold stock insiders as a group has sold out, besides Steven Jon Kaplan would be one of the first to post this information when it happens. Insiders do not buy their own stocks back on a whim, nor do they ever sell on a whim. They will hold for many years if they have to, and our wave counts should never conflict with this information.

One contrarian indicator I use is the Gold/Hui ratio, which is sitting at 6.23:1 right now. Very cheap was 10:1 with very expensive being closer to 3:1. At present this does not tell us that a sudden HUI crash is going to happen any time soon. Besides, only the late comers that take big positions, will get burned if that were to happen.

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HUI Gold Stock Bullish Review

I have to give readers a small warning about the wave count above, as it is a very bearish wave count in the long term, but still very bullish in the short term. All other gold stock ETFs have different wave counts between each other as well, so this creates many different scenarios. 

If this market is a potential zigzag, then the HUI must not travel to new record highs, but must stop short of any August, 2016 peak. This wave count could easily fail by charging through the August peak. I have seen other wave patterns like this, where the market soared. When we look at the Gold/Hui ratio we are not near any potential overbought condition or expensive to gold.

The ratio is 6.52:1, up from the cheap side of about 11:1. It would have to travel towards 3:1 before gold stocks become expensive when compared to gold. We are still a long way away from any extreme Gold/Hui ratio, so this HUI could be sending the wrong signals. 

Even SIL has the same pattern, but with a much longer looking wedge. Unless I hear that Steven Jon Kaplan turns very bearish on gold stocks and sells all his gold stock positions, I will remain bullish. He will not even warn you about selling anything, the orders will go out to his members in email, and they will execute their sell orders at the same time.  

I have a contrarian friend that would also turn very bearish as he has been a True Contrarian subscriber for many years. If the real wave action starts to deviate away from the bigger bearish scenario, then that is a good sign.

As a disclaimer, when I talk about any gold stock wave count, they should not be used as a buying signal or any buying investment advice, as I’m not a registered investment advisor. I consult with people that have the desire to better understand the Elliott Wave Principle (EWP) from a long wave perspective.

Some gold related funds like CA: PME, which I have a small position in, is even paying out $5 CAD per month on 200 shares.

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HUI, Gold Stock Bull Market Review

 

 

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.  

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HUI Gold Stock Review: 2003-2017

 

 

The HUI is the mainstay of all gold stocks, and most of all the other US priced gold stock ETFs, will act much the same. The bull market leading up to the 2011 peak can only fit as a diagonal 5th wave, and even then I can still make adjustments for a better fit. At the 2011 peak my Cycle degree wave III can fit very well at this time.

Of course, then the 2011 Stock Maina started to kick in, which killed the golden bull. The bullish mood in 2011 was unprecedented as the major reversal caught all the bullish experts by surprise. If you haven’t figured this out yet, the markets will always act this way, as they will never let the majority win. It is also mathematically impossible for the majority to win money from the majority.

In a bull market the majority always seems to be winning, but their profits are always left on paper. Paper profits are never real, when they are not converted to useful cash.

Buying stuff based on the wealth effect will eventually crush us all, as we would be buying with unrealized paper gains.

In the end the HUI is acting much like all the other gold stock related ETFs, but it never hurts to keep an eye on all of them. I can’t track them in detail as much as I would like, as I’m maxed out on how many asset classes I can cover.

I may track well over 13 ratios, but the most important ones must be measured at the extremes. This week the Gold/Hui ratio calculated at 5.75:1  which does not change as dramatically as other ratios do.  When the Gold/Hui ratio strikes near 3:1 again, then we have a very expensive ratio, which may be accompanied by insider selling.  Until then, this gold stock bull market is alive and kicking, which most of the mainstream experts, have still ignored at this time.

Chances are good when the talking heads jump on the gold bandwagon, and the news blogs are all bullish on gold, then gold stocks will be ready to crash or correct. The markets will never allow the late comers to make any profits as they will lose even in a bull market.  Leaving 170% gains on the table is not an option for the real contrarians, which the HUI has done once already.

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HUI, Gold Stocks Review

 

hui-nov-15-2016

 

The way the HUI has declined, you would figure that it was going south all the way. Of course, that’s what the markets want you to think as the markets want to shake off anyone riding this gold bull, that bought high this summer.  Choosing a bull market is what will get investors burnt, as they always buy high and then sell low in disgust, when the asset class starts to go down. 

The majority buys on the way up, very few buy, on the way down, like the contrarians did in 2015. Even in the summer of 2013, gold stock insiders (contrarians) were going on a buying rampage, that convinced me that a major bottom was near.

The HUI decline is also another great example that retracement ratios don’t work in general.  Waves are never, ever even acting patterns so retracement levels are always changing.  Are there any bullish gold stock analysts that are screaming that a 60% retracement is complete, and that it is time to buy gold stocks? 

Sure gold stocks can go lower at any time, so there is always a downside risk. We are at about a 61% net retracement right now, and the HUI is poking the lower parallel trend line.  We should at least see a rally that can break the top trend line, but we have already run long enough for a Minor degree correction to have completed. 

One of the great indicators I use is the Gold/Hui ratio, which gives us an objective view, how cheap or expensive gold stocks are, when compared to the cash price of gold.  At a minimum, we need two readings, one from a major top, and one from a major bottom. This will give us the outside parameters, close enough to give us something to work with. 

Today this Gold/Hui ratio sits at 6.6:1 from an oversold base of 10:1. The 3:1 ratio was the ratio at the top of the gold stock market in 2011.  Once a real extreme ratio has been established, then rarely does that low get breached once the new bullish cycle starts.  Contrarians know these ratios very well and I started using them as well. The majority never uses these types of indicators, because if they did, chances are good they will no longer work. 

As I see it, we are still closer to the cheap side of things, than getting anywhere near any extreme expensive side.  The expensive reading can only happen when, all the gold bulls are back again, and the HUI is pointing up.  

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HUI Late 2015-2016 Review

 

hui-oct-11-2016

 

When we look back to August 2015 and then the January bottom I show it as an expanded bottom, which I have done several times before. I could be wrong, but if there is any doubt at all, that an expanded bottom has happened, unknown to the masses, then this HUI chart has no option but to crash to a new record low again.  We are a good 1/3 of the way there already, but who says it will stop at a double bottom.

SIL sure came close to an extreme gold/Sil ratio. The HUI also came close to an extreme in early August, which managed to hit a ratio of under 5:1, with 3:1 being extremely expensive.  This morning we were at just above 6:1 which is getting cheaper, but still far away from the 10:1 ratio we may need.  

I would be looking for another zigzag on this downward slope, and I’m sure it will try and fool us as being a major bottom. At a bottom of what?  

We are also at a good setup for a diagonal wave 1 so anything can still happen. 

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HUI, Gold Stock Crash Review

 

hui-oct-5-2016

 

This HUI crash does not surprise me as we need a good bearish mood to flush out all those that are betting with too much of their net cash assets. This may go lower in the short term as another small degree wave 3-4  may need to play out.

If I’m even close, then we could see a “C” wave bull market that will impress us, as we could end up at a “D” wave top in Primary Degree. “D” wave tops are bull traps like the EWP book makes very clear with its description. 

 Yes, Cycle degree wave 3 in gold stocks and gold has a high chance of being completed with the 2011 highs, and what we are going through is a triangle 4th wave that is far from being finished.  I’m in the process of putting the Cycle degree wave 3 peak behind us in chart history.  This will still take some time, as it is impossible for me to do it all at once.  I cannot use any higher letters than Primary degree, until a potential 4th wave in Cycle degree has completed. That can still take many years and may not happen until 2021.

The pattern is more important than time, but the pattern will not work, if we are counting from the wrong peak or wrong bottom with the wrong degree. This is always an issue and reviewing on a consistent basis, mitigates this to some extent. Besides, you will never find a better fitting wave count by drawing some mythical wave pattern into the future. We can only find better fitting wave counts by looking into past chart history. 

This morning the Gold/Hui ratio was about 6.3:1 which is not at an extreme just yet, so more upside can happen. When we reach a 3:1 ratio again, then we are getting close to another extreme.  I only use the gold, “cash price”, (GCY00),  when calculating any ratio, and it matters not how wild gold swings up or down. The gold ratio is always working.         

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HUI, Gold Stock Review 2011-2016

 

HUI-May-14-2016

 

As much as I hate to be bearish on gold stocks, the HUI and GDX have slowed to a crawl recently, and in order for the next leg up to happen, we need a good correction. The trouble with that is, that this decline can also give us a zigzag like pattern. If a flat were to develop, then one would stop before going to new market lows, and the other “should” make a new bear market low.  Gold stocks could fall in sympathy with the general stock market, as people will panic and sell off everything once they realize that even gold stocks can drop like a rock.

Any 5th wave down should be short as wave one is fairly short as well. Wave 3 is the extended wave. Besides the index can’t go to zero nor should there be any inverse splitting. I can get the entire gold stock bear market into a diagonal 5 waves down in Intermediate degree, and we may be finishing the 4th wave. If any decline proves my scenario right, then we have a good chance of getting a full fledged bullish phase pop out the other side, but only after any 5th wave down has completed. 

In other words, we could be looking at a move with 5 waves in Primary degree, heading to new record highs. It sure did not take the HUI that long to reach a screaming high in 2016, so we know what we can expect once the HUI cranks up again.  

It would be useful to develop a record, what the gold/HUI ratio has been, as that may be helpful in figuring out when gold stocks become expensive or are cheap. Just taking a few quick measurements today, it seems that an expensive ratio has hit 3:1 and a cheap ratio did hit 10:1, At present we are sitting around 5.75:1, not exactly an earth shattering ratio, as it is not anywhere near the extremes.

For the time being I am  very bearish on gold stocks, even though I have had no earth shattering news about insiders selling. In mid 2013 insiders were buying gold stocks left and right.   

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