The HUI-GOLD Ratio Is Coming To A Head
Tomorrow is and important day for Metals and Miners. The FED announces their decision at 2:00 PM EST followed by a press conference at 2:30.
There are two potential cycle counts for gold. Our primary scenario foresees a decline into late July or early August. The alternate scenario will confirm a new bull market if gold closes the week above $1,300.
The HUI-GOLD ratio is coming to a head. A break from the pattern will determine which gold cycle to follow. We should see a decisive break soon.
-US DOLLAR- The Dollar remains weak and is doing little to confirm a low. Failure to break above the short-term trendline could lead to another drop.
-GOLD PRIMARY SCENARIO- Primary Scenario: The 6-Month Gold cycle made a double top and prices are working their way down into a 6-Month low. Prices should find support at the trendline completing the 4th daily cycle. Prices should bounce, and then rollover producing a failed daily cycle that finally breaks the 6-Month Cycle trendline.
-GOLD ALTERNATE SCENARIO- If Gold made an unorthodox 6-Month low, then prices are dropping into the first daily cycle low. In this scenario, prices would breakout above $1,300 and establish a new bull market. I will address entry strategies if gold closes the week above $1,300.
-SILVER- If gold follows the primary scenario, we should see silver test and potentially break the critical support level. However, If gold closes the week above $1,300 and confirms a new bull market, I’ll look to buy silver.
-HUI GOLD RATIO- This chart sums up the two scenarios in gold. Trading is challenging as the pattern narrows. If the pattern breaks lower, our primary scenario will be confirmed and miners/gold will breakdown. However, breaking sharply above the upper trendline and the 200-day MA would support the alternate scenario (May 6-Month low) and signal a breakout in miners.
-GDX- Miners rallied before the FED meeting. Prices are range bound and need to break free for a trending move to develop. I will buy miners if GDX breaks convincingly above the upper boundary.
-GDXJ- The last two days GDXJ outperformed the XAU junior mining index. It could be the rebalancing, or perhaps smart money is buying before the FED announcement. Prices would have to close progressively higher above the 200-day MA to register a breakout.
-XAU- Closing below today’s low will send prices back to the 77.00 level, and then we should see a bounce. Closing above the 88.00 level would imply a breakout.
-DUST- I bought DUST as it closed above the trendline. I had an appointment and couldn’t monitor the position into the close. I exited before my stop was triggered.
-JDST- I was stopped out of JDST at $61.48.
-SPY- Stocks made a new closing high just before tomorrow’s FED announcement. Prices still target 246+.
-WTIC- Prices could be forming bear flag. Another drop is likely if prices don’t close above $46.20.
I will try to update in the AM and after the FED announcement. Volatility could increase significantly.
Disclosure: None.