"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, July 12, 2012

HUI to Gold Ratio Dipping Down Towards Undervaluation Levels Once Again

The breech of the 400 level in the HUI has brought out some further stop-loss related selling as well as fresh shorting by hungry bears in the sector. GoldCorp's news from yesterday is still impacting the miners in general.

That being said, the underperformance of the mining shares against the price of Gold is dropping this important ratio down toward those levels which have been considered as "undervalued" once again. While it is small consolation to mining equity bulls to see the value of their holdings being diminished once again, it does appear that we are entering a region that should engender value based accumulation sooner rather than later.

In one sense, the miners are suffering from the same fate as gold bullion as it waits for further signs of QE from the Federal Reserve. However, there are also some cases where disappointing fundamental news has given some hedge funds the boldness to ply those ratio spread trades of theirs once again.

Trader Dan on King World News

Please take a bit of time to check out my recent  written interview with Eric King of KIng World News as we discuss the technical price chart of the US Dollar and some general concepts about price action.

It should be kept in mind that a rallying Dollar tends to bring pressure across most of the commodity complex as a sector. There are exceptions however and we note those.