Gold Miners Waiting On This Chart

It’s not a chart of nominal HUI with upside technical targets. We’ll do that in NFTRH this weekend, along with the usual individual miners. Rather, it’s a companion to other charts we’ve been reviewing over the last several months showing the undervaluation of the gold stock sector relative to gold’s performance vs. cyclical assets/markets. For example, gold has risen strongly vs. the CRB index and that is a sector fundamental undervaluation.

But on the macro picture, do you think that maybe gold stocks would benefit if gold manages to turn up vs. the US stock market? This chart appears to hold the key. HUI has been in a beautiful correlation to Gold/SPX since the 2011 top. To this point, the ratio has not turned up but you can see why I harp so much on the need for Au/SPX to get in gear. If it does, and joins Au/CRB and others, hang on to your hats and prepare for some upside targeting beyond the bounces of the last few years. We’d then go from identifying value mode to acquiring targets mode.

[edit] For a little perspective, here is the GLD/SPY ratio (daily chart) nearly an hour after Thursday’s open. It appears to be breaking upward from a bull flag and a hold of the SMA 200. If it holds up it could be an initial hint about the above scenario unfolding.

Check out my previous gold post and make sure you check back to see my next post!

Best,
Gary Tanashian
Biiwii.com

Subscribe to NFTRH Premium (monthly at USD $33.50 or a 14% discounted yearly at USD $345.00) for an in-depth weekly market report, interim market updates and NFTRH+ chart and trade setup ideas, all archived/posted at the site and delivered to your inbox.

You can also keep up to date with plenty of actionable public content at NFTRH.com by using the email form on the right sidebar and get even more by joining our free eLetter. Or follow via Twitter @BiiwiiNFTRH, StockTwits or RSS. Also, check out the quality market writers at Biiwii.com.