"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat

Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput


Thursday, April 4, 2013

HUI - Dead Cat Bounce or Something More?

The mining shares displayed an unusual bit of activity in today's session (Thursday). What was that you ask? They went up! Better check that because it might have been a misprint on the tape. I am not sure what the catalyst was other than some profitable bears ringing the cash register but they at least stopped moving lower for a day.

Here is a longer term chart of the index where you can see that it has entered a support zone surrounding the 61.8% Fibonacci retracement level of the 2008 low and 2011 high. If this index cannot get back above the 375 level, there is a chance it could fall as far as the region marked, "SECONDARY SUPPORT ZONE".

The repercussions of such an occurrence would be a further drop in the price of gold. That or else the HUI/Gold ratio would be reaching levels that would stagger us all.

I would not make too much of today's pop higher in the mining shares unless we see this index move back above this week's high. Even at that, I would prefer to see it clear 375 to indicate this move lower has put in a spike bottom. Bulls will not be able to breathe a sigh of relief until the HUI is sitting with a "4" handle on it again.


  1. Your statement " the HUI/Gold ratio would be reaching levels that would stagger us all".

    Based upon any TA, I would think that this was already STAGGERING. Unbelievable how low the XAU/Gold, HUI/Gold,GDX/Gold sank. I mean all the leverage ratios on the miners must have scared the hell out of the bankers who had lines out to them. Just hoping return to a somewhat reversal to the mean so I can get out of a rope that has been slowly pulling me to the bottom of a lake. The jobs number sure helped a bit. Maybe a bit of sanity and cold water thrown on this hot air balloon. The disconnect between "reality" and the world constructed by main stream financial sites is unbelievable. Hard not to get married to a world view that thinks the real world has lost its freaking mind. Thanks for all your work Dan.

  2. Dan, you're a beacon in this stormy time. Could not survive w/o your service to the community
    , thanks.

    Interesting that today (Friday) the HUI is not following gold...I don't know what to make of it, but suspect that it is a head trip that the big fish trying to exit w/ maximum profit are foisting upon the market. Other comment is that it'd be interesting to see a proxy for junior miners (GDXJ doesn't go back far enough) as a ratio to gold... talk about staggering.

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