Best of the Week
Most Popular
1. Crude Oil and Water: How Climate Change is Threatening our Two Most Precious Commodities - Richard_Mills
2.The Potential $54 Trillion Cost Of The Fed's Planned Interest Rate Increases - Dan_Amerman
3.Best Cash ISA Savings for Rising UK Interest Rates and High Inflation - March 2018 - Nadeem_Walayat
4.Fed Interest Hikes, US Dollar, and Gold - Zeal_LLC
5.What Happens Next after February’s Stock Market Selloff - Troy_Bombardia
6.The 'Beast from the East' UK Extreme Snow Weather - Sheffield Day 2 - N_Walayat
7.Currencies Will Be ‘Flushed Down the Toilet’ Triggering a ‘Mad Rush into Gold’ - MoneyMetals
8.Significant Decline In Stocks On The Cards! -Enda_Glynn
9.Land Rover Discovery Sport Extreme Driving "Beast from the East" Snow Weather Test - N_Walayat
10.SILVER Large Specualtors Net Short Position 15 Year Anniversary - Clive_Maund
Last 7 days
Gold Junior Mining Stocks GDXJ Fundamentals - 23rd Mar 18
Global Trade War Fears See Precious Metals Gain And Stocks Fall - 23rd Mar 18
Stocks Recovering from a "deep dive" Overnight - 23rd Mar 18
Blaming the Fed for Weaker Greenback US Dollar - 23rd Mar 18
Watch This Group Signal Stock Market Trend Changes - 22nd Mar 18
Stocks are Gapping Beneath the Trendline Support - 22nd Mar 18
Fed Action Casts Shadow on Bullish Case for Stocks - 22nd Mar 18
A Strong Economy and Weak Stock Market is Bullish for Stocks - 22nd Mar 18
Fed Raises US Interest Rates 25bp – Where Are We In The Stock Market Cycle? - 22nd Mar 18
Why Spotify Will Likely Surge During Its IPO - 22nd Mar 18
SY Police Arrest Woman for Blowing Trumpet at Sheffield Tree Felling Protest - 22nd Mar 18
Facebook: The Anti-Social Network Covert Data Gathering - 21st Mar 18
Additional Signs for Gold and Silver Amid Increasing FOMC Tension - 21st Mar 18
Credit Concerns In U.S. Growing As LIBOR OIS Surges to 2009 High - 21st Mar 18
Stock Markets Are Flat-to-lower Before the FOMC - 21st Mar 18
Will Powell’s Actions Pop Stock Market Perfection - 21st Mar 18
Economic Moral Hazards of the International Criminal Court - and Philippines Withdrawal - 21st Mar 18
Larry Kudlow vs. Vladimir Putin on Gold - 21st Mar 18
Trump Builds Economy and War Machine - 21st Mar 18
This Stock Market "Illusion" Can Destroy Once-Vibrant Portfolios - 21st Mar 18
Gold Short-term Pull Back in Progress - 20th Mar 18
Stocks Appear to be Under Pressure - 20th Mar 18
Time To Eliminate Your Wall Street Tax? - 20th Mar 18
The Beast from the East Snow, UK Roads Driving Car Accidents - 20th Mar 18
Can Bitcoin Price Rally Continue After Paypal Fake FUD Attack? - 19th Mar 18
2018 Reversal Dates for Gold, Silver and Gold Stocks - 19th Mar 18
This Tech Breakthrough Could Save The Electric Car Market - 19th Mar 18
Stocks Set to Open Lower, Should You Buy? - 19th Mar 18
The Wealth Machine That Rising Interest Rates Create Conflict With The National Debt - 19th Mar 18
Affiliate Marketing Tips and Network Recommendations - 19th Mar 18
Do Stocks Bull Market Tops Need Breadth Divergences? - 19th Mar 18
Doritos Instant £500 Win! Why Super Market Shelves are Empty - 19th Mar 18
Bonds, Inflation & the Market Amigos - 19th Mar 18
US Housing Real Estate Market and Banking Pressures Are Building - 19th Mar 18
Stock Market Bulls Last Stand? - 18th Mar 18
Putin Flip-Flops Like A Drunken Whore On Bitcoin Cryptocurrency Legalization - 18th Mar 18
How to Legally Manipulate Interest Rates - 18th Mar 18
Return of Stock Market Volatility Amidst Political Chaos and Uncertain Economy - 18th Mar 18
Bitcoin Price Trend Forecast, Paypal FUD Fake Cryptocurrency Warning - 17th Mar 18
Strong Earnings Growth is Bullish for Stocks - 17th Mar 18
The War on the Post Office - 17th Mar 18
GDX Gold Mining Stocks Fundamentals - 16th Mar 18
Nationalism, Not the Russians, got Trump Elected - 16th Mar 18
Has Bitcoin Bought It? - 16th Mar 18
Crude Oil Price – Who Wants the Triangle? - 16th Mar 18
PayPal Cease Trading Crypto Currency Bitcoin Warning Email Sophisticated Fake Scam? - 16th Mar 18
EUR/USD – Something Old, Something New and… Something Blue - 16th Mar 18

Market Oracle FREE Newsletter

Urgent Stock Market Message

Gold Vs Gold Stocks ($HUI) Who is Leading Who?

Commodities / Gold and Silver 2012 Dec 17, 2012 - 03:26 AM GMT

By: WavePatternTraders


The Gold stocks have failed to deliver on my expectations of a move higher and it has caused me to re-think the direction of the yellow metal.

The past few weeks I have suspected that Gold stocks and Gold was a corrective pullback but should have been a shallow pullback, relative to the ideas I was expecting. With the breakdown in the $HUI, it strongly suggests Gold and the Gold stocks could be in some trouble.

When you look at this chart, you can clearly see that the Gold stocks and Gold move well together, but it’s when they diverge that it becomes an issue.

The $HUI has been underperforming the price of Gold for a number of weeks, but it’s the latest breakdown that should be of concern to the bulls in both markets.

Back in April last year whilst Gold has hovering  around the $1650 area, those that were watching the Gold stocks were one clue ahead of the move as it was suggesting that there was an arbitrage between the 2 markets. The same is setting up again, clearly one market is either behind the curve or ahead of it.

If we look back to the prior fractals from last year we can also see we have a similar fractal playing out in Gold, it’s one of the reasons I strongly suspect that the recent price action we have seen on Gold is not bullish at all, as I have tried to give the bulls many opportunities to rally the markets higher, it appears they have failed to so do.

Even with a new round of QE, (is it QE4, 5 I lost track) the metals can’t get a bid, as the US$ sold off heavily this week the metals showed little upside to that US$ reaction, that should be a concern to the bulls and the fact we saw Gold and Silver push lower with the US$ is in my opinion a vital clue that we could be playing out a similar fractal from last year.

Whilst Gold remains under $1750, short term it remains in a bearish trend and I think the $1680 support area will likely get tested and be broken, for a sharp move towards $1620-1600.

When you look at the $HUI and the failed break out above the granite floor, it looks like a failed retest from below.

Having initially it my target back in May 2012, I had strong hopes that the Gold stocks would lead the charge higher and drag yellow metal with it, but the weakness shown in the $HUI is a concern for me to remain bullish on Gold short term as I think the Gold stocks are speaking and a lower target of 250 is not out of the question.

If the prior low “gives out” then I don’t see much support until the lower target around the 250-270 area.

The failure at the underside of the granite floor in 3 waves from an Elliott perspective suggests that the move is a 3 wave bounce and likely part of the trend that started back from its high in Sept 2011.

If we are to see more downside in the Gold stocks I fear it’s going to drag  Gold lower just like before and looking at that arbitrage between the 2 markets, Gold could be near a nasty move lower if the $1680 support gives out in a big way.

To negate this setup, I really want to see the Gold stocks reverse from this current down trend and Gold to follow higher and rally aggressively above $1750, the fact it’s not showing any strength with the US$ moving lower, should be a concern to all bulls in both Gold stocks and the yellow metal.

Goldcorp (GC)

If we take a look at the largest weighted stock in the $HUI we can see a similar pattern, so it pays to watch the biggest stocks as they have a large effect on where the $HUI is likely going.

According to this source GG has a weighting of 16.20%, I don’t know if that is true but it sure seems a lot for one market.

Now if we overlay that with the $HUI.

So GG is to the $HUI as AAPL is to the NDX. If you follow Goldcorp you can see where the $HUI is likely heading and it don’t look at pretty picture on GG.

Let’s look at another stock from that list.

Barrack Gold (ABX)

When we look at this chart, we can see it has a similar appearance to the $HUI and GG. With a weighting of 15.37%, that’s 2 stocks with a combined weighting of 31.57%.

That’s impressive that 2 stocks have that much weighting, with both stocks in a down trend, it seems a that the bulls need to see those two stocks break out to the upside or reverse their current trends before we can get bullish on the $HUI.

Let’s look at the 3rd stock from that list.

Newmont Mining Corp (NEM)

This is the bearish of the 3 stocks shown as we can see it’s almost back to the prior lows and if you look carefully there appears to be a text book 5 wave impulse move, so not a pretty sight in the 3 major stocks in the $HUI.


Just looking at the 3 major stocks in the $HUI, it would appear that Gold stocks are in trouble and I suspect further downside is setting up.

If we are in a similar situation from last year, when the $HUI was leading Gold then I suspect we are about to see a new leg lower in Gold to catch up with the Gold stocks.

Until next time

Have a profitable week ahead.

Click here to become a member

You can also follow us on twitter

What do we offer?

Short and long term analysis on US and European markets, various major FX pairs, commodities from Gold and silver to markets like natural gas.

Daily analysis on where I think the market is going with key support and resistance areas, we move and adjust as the market adjusts.

A chat room where members can discuss ideas with me or other members.

Members get to know who is moving the markets in the S&P pits*

*I have permission to post comments from the audio I hear from the S&P pits.

If you looking for quality analysis from someone that actually looks at multiple charts and works hard at providing members information to stay on the right side of the trends and making $$$, why not give the site a trial.

If any of the readers want to see this article in a PDF format.

Please send an e-mail to

Please put in the header PDF, or make it known that you want to be added to the mailing list for any future articles.

Or if you have any questions about becoming a member, please use the email address above.

If you like what you see, or want to see more of my work, then please sign up for the 4 week trial.

This article is just a small portion of the markets I follow.

I cover many markets, from FX to US equities, right the way through to commodities.

If I have the data I am more than willing to offer requests to members.

Currently new members can sign up for a 4 week free trial to test drive the site, and see if my work can help in your trading and if it meets your requirements.

If you don't like what you see, then drop me an email within the 1st 4 weeks from when you join, and ask for a no questions refund.

You simply have nothing to lose.

By Jason Soni AKA Nouf

© 2012 Copyright Jason Soni AKA Nouf - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

WavePatternTraders Archive

© 2005-2018 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules