"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


Wednesday, June 26, 2013

HUI - No Buyers

The rate of descent in the mining shares is remarkable. Rarely does one witness a collapse of this magnitude and severity without some sort of period of consolidation. It speaks to me like a final washout is underway, even of the most die-hard, long term bulls.

In a period of only 9 months, the index has lost 60% of its value. As stated before, the damage inflicted on the owners of these shares, both financially and psychologically, has just about guaranteed that the vast majority of those who bought them as a hedge against expected inflation will never again in their lifetime come back as buyers in this sector. If they do come back to gold, it will be the ETF, GLD, or some other entity but it will not be mining shares unless management makes it attractive through dividends or some other novel method to own them.

In looking for a place on the chart where the POTENTIAL for a stem in the bleeding can occur, I have noted two different sets of Fibonacci retracement levels. The first set takes the entire decade long bull market and the second takes the rally off the 2008 low, prior to the inception of QEI.

Note how close the various Fibonacci lines from both sets (red and blue lines) come closely together at key areas. Notice also how both sets have failed to offer any support.

We are now down to a region where we are running out of support levels. I have noted the next one which starts below the 200 level and extends to 186. If that cannot hold, we are back to where the index was at the bottom in 2008, near 159 - 160.


  1. Haven't heard any rumbling about shut-ins yet. If the selloff of bullion in Asia continues, we'll see an 11 handle soon.

    What would be very nice to see a fast and furious capitulation event right to 1050. It sure doesn't look like the HUI will hold 200.

    1. Here you go WillyD -




      Just 3 quick examples pulled for stocks on my tracking screen.

  2. http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/6/26_Physical_Gold_Market_In_Disconnect_As_Premiums_Hit_Record.html

    1. That's the biggest bunch of nonsense I've seen come out of KWN. Unsubstantiated claims all of them. All you have to do is google "gold prices India" or "gold prices China" , and see reuters articles with quotes from wholesalers in India and China saying premiums and demand are low, while supply is high.

    2. http://in.reuters.com/article/2013/06/26/markets-india-gold-idINDEE95P08I20130626
      Gold Premiums Double In India

    3. This comment has been removed by the author.

    4. ohn Hathaway does talk his book... but Michael's right about the Indian premiums + demand.

      That said, the explanations for gold tanking are absurd...Bloomberg had competing headlines today in the most popular stories list: 1. about Lacker (hawk) saying Fed "not near" cutting balance sheet + GDP below expectations VS 2. Gold drops on Fed cutting stimulus/balance sheet AND economic growth. Since no reads anymore and critical thought is dead in the general population, no one questions the inherent contradiction.

  3. http://truthingold.blogspot.com/2013/06/the-precious-metals-sector.html


  4. Really ugly. And of course, the HUI is just an average- so you have many of the major gold producers, for example ABX and KGC, performing far worse than the HUI! To speak nothing of the juniors. It's going to be a long, hot summer.

  5. http://jessescrossroadscafe.blogspot.com/2013/06/gold-has-had-34-correction.html

  6. Just read a Forbes article today, the headline was "Kinross enters oversold territory"...duh...do ya think? what was your first clue Forbes?

    I jettisoned yet more gold related holdings today where I was still money up.
    I've had enough...I can always buy back in with a simple key stroke.

    1. Dean,
      I listened to the advice of the PM investment gurus and built a 'core' position of 'quality' miners that I would hold through thick and thin. I sold most long ago due to under performance. EXK however, I bought a bunch of near the lows in early '09. I've taken profits along the way in late '10 and early '11, but have held 25% of the original position . . . . until now. Like you I'm still 'money good' on this one, but I'm bailing on any bounce over the next couple of weeks, will use profits to offset losses incurred on other miners. The proceeds of the sale will be used to pay down some debt as well as stack some more physical assets in the form of durable productive machinery.


  7. Dan,

    Im not sure why no one has ever commented on the fact that the HUI HAD THE BIGGEST GODDAM HEAD AND SHOULDERS TOP and its price objective is 150... it was easy to see that it was giong to go down to that level.. ITs not manipulation as sinclair loves to call it.. there is a time and place for all items and the miners is not it right now.

  8. thanks for the posts Dan! I must admit I expect the HUI to be under 200 at any moment tomorrow...People who bought DUST have made suuuch a killing recently...Cash has been king for me for a while but i am tempted to bet against the miners just for a tinnnny bit, like 1 day, intraday...just to make money during this period, even if its just 2 or 3 percent will make an important psychological boost. I just dont know if the HUI can go as low or lower than it did in 2008...all that just on talks of maybe slowing the rate of more money printing is crazy...and since then all these 'officials' saying the market overreacted? and then the SPY and Dow go up and gold continues getting butchered...I wonder what it takes to turn these around....will it be on a fresh new trading day? will it be the second the fed/fomc announce not to slow printing, or even to increase cos of deflation/correction forces?...will it be on a no news day when the miners selling has exhausted? and finally, what if a huge deflation/correction/general bear market sell off happens, im talking more dramatic than 2008, will gold sell off too as i think it would? its already been raped like a rag-doll....it could inversely become a safe haven if bonds too are rejected...anyway, appreciate the analysis and charts...

  9. I stopped drinking the gold cool-aid. Yes, it is a good long term investment but fighting the FED is a fools game.

    I suspect that it will be several years before gold enters center stage. I never thought I would give in but I have reduced my exposure to gold and, yes, I have bought DUST and GLL. Do not hold it for long, I have made some modest money. You could have actually shorted Gold at almost anytime in the last year and made money, this trend is showing no sign of slowing down.
    I cannot believe the Kitco headline today "Weak-handed longs throw in the towel"...what?...after being pummeled for just about 2 solid years owning the most reviled investment in the Western World they have the nut to use the term "Weak handed longs"?
    I almost pine for the good old days of Jon Nadler.
    He must be feeling pretty darn good right now.

    1. i dont know about several years for gold to return center stage... just january this year i remember me and gold were still on a honeymoon period...i still think next year gold will be higher than we are now for sure..bernanke leaves and in comes a new fruitcake wholl print to oblivion and can blame it on the last guy..meanwhile fundamentals only consolidate for owning gold..so long as real monetary tightening, geopolitics, etc doesnt change..but nice one on DUST and GLL, i never hearrd of GLL actually: just adding that to my list now...i may just buy some DUST if i see gold rise a bit, that will be my sell on gold rally play. i remain emotionally attached to gold, i just dont own it for now.

  10. When I read the above comments, comments on other blogs, the mainstream gold articles being published....and then look at the chart that Dan posted today, I can think of only one word. Capitulation.


  11. Hey Dan, thanks for the awesome commentary as usual. What are your thoughts on China and its effects on the rest of the world moving forward?

  12. Just trying to make sense of what is going on. Maybe there is a great demand from a lot of people buying small quantities of gold and not enough demand from the few that can buy huge quantities. Otherwise this kind of smash is hard to understand.

  13. Dan,

    The last couple of years I have read your site with much anticipation every day. Suffice it to say, you are truly the best. I made some comments in an Old No. 7 "haze" and have corrected my ways. I have to admit, FEAR and my BRAIN were not working quite up to par, but, I am feeling much better and the mind is now firing on all cylinders.
    I am now questioning this last correction and believe that it is ASSET STRIPPING for sure. Ben cannot stop printing as the only thing the media can really justify (FALSELY) is the real estate market. The GDP revision is proof. Miners will certainly have shut ins and there will be consolidation. Once Wall Street has stripped the miners, and gold and Silver markets, bond will shoot up, and they will short the Stock market, if they have not already STARTED POSITIONING. I believe we are indeed in the middle to late innings. Even Babe Ruth could not pull us out.I have followed most of Jims Advice, and am pursuing friends to do the same. (Asset Stripping of Cash from Big Banks) Returning their favor.
    I just wish that the miners had changed the market mechanism for their product. A great article this morning on Monetary Metals on Zero Hedge. The Comex will get destroyed, but not before the bullion banks get to the miners with hedging products. Being a student of Economics and Finance from the 80's this market is certainly not a market. I never read anywhere where GDP revision down 25% would predict a follow up with Stocks up. (Alternative Universe). If you compare the gold v stock market charts and sit them side by side from 10-2008 to 3-2009, we are in the beginning stages of that pattern. Wall Street is positioning themselves. If it is a NWO, which everything points in that direction, it will be a very interesting period ahead.
    I have appreciated learning from you Dan. And sorry, Old No. 7 was talking, the old short circuit brain to typing it out and sending it disease. The political front is showing us that the States vs. Fed is heating up and I happen to greatly agree with your thesis. I am hoping to join those of you in remote areas, mine in the Appalachian Mountains. You have a great day and continue your patriotic ways.

  14. very dangerous to make comparisons with '74-76 break and late '08 break, I would think; mkt needs TIME to put itself back together; we all have to remember that these mkts are broken and rigged, so do not think too logically

  15. How gold has the greatest point drop of all time with a 17 trillion debt and 0% rates and QE forever is beyond belief.

  16. This is exactly what the Gold Bull does, it shakes off as many people as it can before streaking higher. We have thousands of years of human history on our side that sez Gold/Silver are money and not some whacky Western world johnny-come-lately fiat ponzi currency destined to fail.

    Remember what Jesse Livermore said:

    "It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight! Men who can both be right and sit tight are uncommon."

  17. Shame to see such great thinkers such as Jim Sinclair and Richard Russell see 50 year careers and reputations completely ruined in a span of about 18 months.

    Gold about to break below $1,200, wow...

    Meanwhile, Bernanke will go down as the greatest Central Banker that ever lived. Actually Draghi and Shinzo Abe are also vying for that same title as well.

    1. The more of the action we are seeing in markets of late, the more physical gold in my possession @1,200 or a bit below (wasn't Hubert du Haut saying 1150...) looks like a very inexpensive insurance policy.

      Japan--the 3rd largest economy in the world is yo-yoing w/ insane deltas in currency & markets. China, #2, looks like banks froze the other day. USA, #1, has to have Fed Board members speak 2 days in a row to assure markets that QE won't end (Probably more for bond prices rather than stocks)-and long bond still doesn't look so great despite the Balls to the Wall talk of the Fed Governors. So I would say things aren't looking so hunky dory for central bankers (just wait until the rubber hits the road in the EU).

      DUST's -7% performance today w/ -20 gold looks like a bunch of funds were maximizing quarterly earnings.

    2. YEAH! i got in and out of DUST and made just 25 dollars as it was just bumping up and down around the 155-157 area....then i went out for 3 hours...came back..gold down to 1200, drops 30 bucks...not that suprised, and i wanted to stay in DUST for that but thought naa, its sunny, i dont like stress, etc....and then realised DUST goes down, NUGT goes up..the miners in general are up with gold down 30 bucks...whaaaa? is this the sign many will see as a areason to jump in...i dont know about guessing the bottom and all this below a 1000 chatter...id be happy at this point buying a nice mine like PVG and just chilling there for a while...but Dan, please let us know if that miners unchanged/up despite gold drop is relevant?

    3. Sinclair deserves to have his reputation tarnished.. all he ever screamed was up up and away.. any drop was manipulation to that guy.. he ONLY published bullish articles on gold and silver weather public or subscription based.. Now he is holding onto Polny who said the floor was in at 1320... guess hes wrong.. To bad he spent 20K for that subscription..

      If sinclair is spending on cyrstal balls why would anyone listen to the guy...

    4. Alison;

      Just a head's up to let you know that Jim Sinclair is a personal friend of mine. Yes, his calls on gold over the last year have not been very good but he remains my friend.

      What this just goes to show you is that you have to learn to tune out everyone and just let the charts and the market speak to you and tell you what it wants to do. Here is a simple fact that I learned many years ago as a trader - NO ONE, and I do mean no one, has the faintest idea what a market is going to do tomorrow or the day after that or the week after that, etc.

      Especially now, that we are living in times during which an unprecedented experiment in money creation has been ongoing. No one alive has ever seen anything like this before. That means all of us are drawing on experiences and knowledge attempting to ferret out what is coming next.

      What this means to me is that the market alone is the only voice that we should pay heed to. It is never wrong regardless of what we might think or believe. Yes, it can misinterpret events but truth be told, maybe it is we who are misinterpreting the message. When the chart pattern turns for gold, hopefully we can recognize that as well.

      That is why I write at this site - I am very friendly towards gold long term but that does not cloud my judgment as to what the chart is saying. right now, it is awful and as of this moment, I still see no signs of any sustained buying. that is eventually going to change but the timing remains unclear. It will happen when it is ready to happen and not because someone says it must.

      Too many pundits in the gold industry are fixated with trying to call market tops and bottoms. There is no useful purpose in that whatsoever other than stroking egos.


  18. It's downright fugly. Shorts keep pushing it down to key support levels, then nobody steps up , they push it down more. NO BUYERS YET! DOWN SHE GOES!!

    I'll be all over it like a hobo on a ham sandwich at 1050 area.

  19. I wonder if we're setting up for a VERY nice and tasty short squeeze.

    Shorts are getting greedy here. Nobody is covering. Another 10% to the downside should just about do it.

    When I think short squeeze, I'm thinking physical squeeze too. Bullion banks could get burned bad by this one if the physical crowd decides to lock in additional inventory all at the same time post-bottom.

  20. sinclair, prechter, russell, granville are only men, and as far as Livermore goes, the truth of the matter is that he was only a good manipulator who blew his brains out in the washroom of a saloon-dead broke. 1146 is 5/8 retracement of "08-11 move, so that may provide some support, one would think; steve in sparks, and btw, when major trends change, they change big time; classic example is what i told everyone 20 years ago that Nevada had topped, especially Reno-Tahoe, thanks to the beginning of Cal Indian Casinos, which in those days started as only bingo joints; 10 yrs ago Reno was 5th in country, now 10th; Vegas then 1, now 2 to Macau; when it is over it is over folks and what we all are hearing is that big old fat lady singing; TIME heals all wounds, so be patient, PM Bulls!!

  21. That's true arnie. But several types of supply and demand outside of traditional markets work feverishly. That prevents the disclosure and transparency we could use to make our investment choices. For instance:
    Offmarket transfers help sovereign wealth funds, aristocrats, tycoons and central banks.
    Black market scrap and refinery business is booming.
    ETFs, metals exchanges and Central Banks swap and lease gold that stays on their books because either the IMF or their regulator and disclosure agreement permit it.
    Hundreds of gold bars with tungsten cores ended up in China several years ago in the initial stages of the financial crisis as another delaying tactic in which the authorities continued in denial.

  22. http://jessescrossroadscafe.blogspot.com/2013/06/gold-daily-and-silver-weekly-charts-end.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+JessesCafeAmericain+%28Jesse%27s+Caf%C3%A9+Am%C3%A9ricain%29

    "Intraday commentary":

  23. Wow Dan,very nice and awesome blog about buyers and other stuff thanks for the sharing a such nice information.Internet Marketing


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