For those interested in looking at the mining shares ( frankly there are a lot more interesting charts than gold miners to look at right now) here is the weekly chart of the HUI.
Here is a quick overview....
The index has managed to avoid breaking down below the key 200 level; however, upside progress has been minimal. Note the series of lower highs indicative of general weakness in the sector.
This week's close pushes it back below the major moving averages that I track with it looking like a new downside push back towards 200 is possible once again. Much will depend on how the Dollar functions next week and what we get coming out of the Fed.
This index has been limping along in a lower grinding pattern for the last 21 months after suffering a devastating collapse two years ago when it failed to clear 525.
For now, the most likely pattern is more of the same grinding sort of trade. Value based buyers are bottom fishing in the sector on ideas that the stocks have been beaten up so severely that they have pretty much factored in the worst. The problem for these shares is that IF GOLD WERE TO LOSE $1200, and not be able to recapture it, many who bought the shares will throw them out fearing another fresh leg lower in the precious metal.
Either this index needs to get above 280 for starters, and preferably close the gap at 300, to turn sentiment or the gold price will have to jump sharply higher from current levels.
By the way, here is a current chart showing the HUI compared to the price of gold in a ratio. For the shares to lead the metal higher, this ratio would need to take out .200 for starters....
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