Gold Correction Now Over: Stocks Experiencing Breakout

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Perhaps more importantly, the HUI:GOLD ratio has also broken out cleanly in the weekly chart. I can now say with a high degree of confidence that the correction since last May was over.

You will never see me pounding the table about an imminent break out in PM shares, because the nature of any technical call is fundamentally one of probabilities. Having said that I hope my readers are at least not surprised by the sharp moves in PM shares this week. The background was laid by the weak hands folding as evidenced by the extreme XAU put/call ratio on June 26.

Those wanting to make sense of this move can point to a slew of industry positive news this week: the proposed three way merger between AUY, NTO and MDG, good drilling results from EGO and SLW, and last but not least, NEM clearing its hedge book. It all seems logical, but one can just as well point to the wave structure of this PM bull, and view this flutter of activity as no less predestined than phases of the moon. Now thatís food for thought.

What is clear is that PM stocks are breaking out big time. Volume was very high in big caps such as NEM and AEM, indicating institutional interest...Perhaps more importantly, the HUI:GOLD ratio has also broken out cleanly in the weekly chart. I can now say with a high degree of confidence that the correction since last May was over.

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