Important Inflection Point

As the HUI is set to test its downtrendline today, we face an important inflection point. The HUI needs to confirm the downtrend break already achieved by the XAU and the GDX. Although there are a couple of yellow flags, I believe that the HUI will shortly break its downtrend and follow the XAU and GDX higher.

The yellow flags are the following:

1. Non-confirmation by HUI of the downtrend break in XAU and GDX.

2. Low to moderate volume in the GDX following downtrend break and little follow through in XAU or GDX downtrend breaks.

3. Gold tentative having gained relatively little since the USD breakdown.

Although these flags are noteworthy, I think they will not preclude a downtrend break by the HUI in due course.

First of all, we need to understand why the HUI is showing a non-confirmation today; why is it still below its downtrend line? The main reason is because of its outperformance in September, which cratered a less steep downtrendline due to the September spike up which had not been confirmed by the XAU. In a sense, to attach major significance to the HUI's non confirmation thus far, would be like punishing the HUI for being extra strong in September. In this sense, you can sense the sometimes arbitrariness of the angles of trendlines.

I think it is significant that the traditionally weaker XAU broke out, rather than the stronger HUI. Usually it's the XAU that needs to confirm the break out in the HUI, rather than the other way around. I think it's a bit upside down to argue that the stronger index has to confirm the weaker one.

Second of all, the situation we face today is completely different than the one that we faced in September. In September, when the XAU didn't confirm the HUI, the HUI had surged on expectations of strong seasonal demand, which failed to materialize, and ion the face of a recent downtrend break in the USD. Today, we have strong seasonality AND a major breakdown in the USD, the type of breakdown from which we are unlikely to see a strong recovery since it sliced through major support. That is a significant difference and provides a reason for the HUI to go higher this time.

Finally, we have the action in the GDX. Although it hasn't shown a surge in volume, it has shown steady accumulation the last few days, accumulation which it hasn't seen in months. (I can't post the GDX chart at the moment due to a technical issue.)

HUI and XAU Charts & Commentary

Comments: I think there's a clear channel line being formed in the Gold stocks. The buy and sell points are as outlined in the chart above. I think we're going to have another shot at $642 tomorrow. I'm kind of bullish on this right now even though it's closer to the sell channel line because (i) we had the downtrend break just recently, and (ii) MACD bullish crossover.

Comments: The HUI is the one that hasn't broken its downtrend yet and it needs to to confirm the the break in the XAU downtrend. It's ironic that the HUI appears to be lagging this time. After all, it's higher trendline is because its September high was relatively higher than the XAU--it was in September that the HUI started to break out but the XAU failed to confirm.

Maybe the XAU is more bullish because it weighs silver stocks more which have been on a roll? That's actually something that I need to check: whether the XAU is more weighed towards Silver than the HUI (it is after all, called the Gold & Silver Index). If you happen to know the answer to that question, please let me know by posting below or by e-mail.

Newmont Mining Corp. is Undervalued

Comments: NEM is seriously undervalued here. It was valued higher in 2006 when Gold was $475 and even higher in 2004, when Gold priced at $425. I know they have reserve replacement issues, and declining production in some mines, and recently they've been bitten with the country risk issuen in Uzbekistan, but it's still a very solid company. Barron's was right to recently state that Newmont could still sail to $70+.

Why I'm More Bullish on Silver than Gold

Silver is definitely looking more bullish than Gold these days. Whereas most Gold stocks are breaking downtrends, many silver stocks are looking like they are getting ready to break out to new highs, which portends greater potential for gains in the near future.

I'll definitely be overweight Silver in the coming couple of months. The only Gold plays that I really like right now are AUY, AEM and GSS, and the latter is always a bit of a question mark.

Anyway, check out the Silver Stock charts below:

Comments: After underachiving for so long, HL looks like it's getting ready to retest and probably break the April highs. Although it's not the most pure Silver play, HL nevertheless billed itself as the lowest-cost primary silver producer in North America in 2005.

Comments: The only publicly traded company with 100% of its revenues from Silver, SLW also looks like it's getting ready to retest its all time highs after getting temporarily beaten down on the news of GG's sale of a portion of its SLW holdings. Since GG continues to be a major SLW shareholder, there is some possibility that this news might create a perception that there is some share overhang from possible future share sales by GG. However, GG stated that it has no intention of selling more SLW shares in the near future and, in any case, the past sale was a private one to investors off the market, so I don't think this will be a major issue.

Comments: Although not quite yet ready to challenge the April highs, PAAS is breaking out of a 5 month consolidation base and has topped its September peak.

Comments: SSRI has been coming out with lots of good news recently and has overtaken SLW as the silver play of choice, at least for now. It made a breathtaking move soaring to all time highs above an ascending channel line on Friday following heavy accumulation.

Charts of Interest KGC / USGL / CUP / RGLD

Comments: Update from a couple of days ago. I think CUP is getting ready to break its downtrend. I'm excited about the prospects for this stock. Keep in mind that they have 2 pieces of good news in the pipeline--the announcement of reaplcements to the departing CFO and CEOs. Any news that helps to clear up that uncertainty surrounding the leadership of the company will be beneficial for CUP and if it comes during a time of rising Copper prices which look like they may be ready to reverse their recent downtrend, would be tremendously benefial to CUP. I'm excited about the prospects for CUP.

Comments: USGL hasn't significantly come off its lows yet but I think it might be getting ready to make some kind of decent move soon. This stock has some catching up to do and there is still the issue of consolidating the Cortez trend in Nevada. There hasn't been much news about that recently, but if that whole thing gets started again, USGL could enjoy a decent pop--though there could definitely be some jittery trading prior to the completion of any merger, considering the first merger attempt had to be aborted which marked the top for USGL followed by an ugly reversal.

Comments: Most larger cap gold companies announcing mergers have initially sold down, traded sideways for a while, then rallied after the completion of the merger. GG and IAG are good examples of that kind of action. That's why I'm putting KGC on my Watch List. It's scheduled to close its $3.1 billion merger with Bema Gold (BGO) in late January. The deal requires approval by 2/3s of the shareholders of Bema, which vote will take place in early January. The deal will also involve the spin off of certain exploration assets. I'll be looking to build a position in KGC in mid to late January.

Side Note: KGC's investor relations didn't respond to my question about the merger. I guess they're busy working out the details fo the deal...

Terms of the Transaction: [http://kinross.com/news/1162006-1.pdf]

Comments: Royal Gold (RGLD) recently announced their first significant deal in ages. On October 26, 2006, RGLD announced an agreement to purchase a sliding scale net smelter return (NSR) royalty from Nevada Star Resources Corp., on the Gold Hill deposit, increasing RGLD's already substantial exposure to Nevada. The payment will be $3.3 million for a royalty with a maximum payout of $10 million. The Gold Hill deposit is controlled by a joint venture between Barrick and Kinross Gold.

Early in October, RGLD CEO spoke about his days as a miner, recounting that there is a "tremendous amount of romance being at a mine site" in an interview with the Denver Post... Hmmm... Related Article: [http://www.denverpost.com/ci_4494031?source=rss]

Side Note: RGLD's investor relations has never responded to any of my e-mailed queries. I guess that's the other side of only having 13 empoyees. Not enough people to answer e-mails from investors...

Happy Times?

Comments: A forceful move down in the USD portends good things for Gold. There is still some lateral support but I think it's just a matter of time before that breaks--if it doesn't break early next week. The volatility bands were squeezing shut very tightly so there could well be quite a lot of volatility left in this move.

[Edit from Sunday 11/26: a senior Chinese F/X official was quoted over the weekend as saying that countries that are holding U.S. Dollar reserves find it difficult to diversify because no other asset has the same liquidity as the U.S. Dollar, making a big sell off in the USD unlikely. I think this news may result in some kind of bounce attempt in the U.S. Dollar. That's the problem with relying on these rumors that China is going to diversify out of the U.S. Dollar and into Gold. However, one alternative to the U.S. Dollar is the Euro, which offers plenty of liquidity. So, in my opinion, China doesn't need to diversify its reserves into Gold, for Gold to appreciate--they can indirectly cause Gold appreciation by buying the Euro instead, with which Gold has been strongly correlated.


Comments: The XAU was the index that failed to confirm the move up in the HUI in September, but this time it appears to be leading in breaking the downtrend, despite some weird-looking chandlestocks the last two days. Still need HUI to confirm the downtrend break (a move above 347 should do it).

Portfolio Gain/Loss for the Week: +4.75%. I made back last week's losses and then some. I bought back a bit on Friday, but I was careful not to go overboard just yet. Hopefully December will bring another nice long winning streak. In my options portfolio, I really lucked out on the FCX calls, which was a huge surge for me. I'm around half way to making back my depressing options losses now. Just going to take it one day and one week at a time.

USD Chart & Commentary

Comments: Perhaps my caution was unwarranted yesterday. When I look at the size of the down move in the USD, I can't help but think that a Gold rally must be around the corner. Only thing left is the lateral support. It's strange that the gold stocks were so lukewarm on a move in the USD like this. Very strange. Anyway, like I said a couple of days ago, a big move is coming in the USD. Deep penetration of the lower Bollinger implies that this move will have some legs (down). But we'll see. I got out of most miners yesterday because they reacted against the downtrend line. Might as well be patient a little longer and see whether we can close above the trendline.

Precious Metals Sector Recap

• Barrick Dogs NovaGold: Barrick is not to be easily dissuaded from its bid to acquire NovaGold. It's been a while since I've seen one company dog another like this so publicly. If you haven't read the below, it's worth a read. I'm guess it will lead to a law suit or two being filed by NG.

Related News Release: [http://biz.yahoo.com/iw/061117/0186161.html]

• Update on Platinum ETF: Looks like people are now getting sceptical about a platinum ETF coming out as no filings in connection therewith have so far beeen made. Platinum made what looks like a reversal spike up, going as high as $1400 per ounce before falling back now to $1145 per ounce, all during the last day and a half. Because people voiced the same scepticism about the Silver ETF (that there's not enough liquidity in silver to allow an ETF), it's hard to know what to make of the rumors. However, one statement did catch my eye in the article below: "The longer term prospects for platinum demand have been damaged by this move. It will accelerate substitution efforts from industrial users of the metal and with Chinese jewelers unable or unwillingto buy platinum ahead of Chinese New Year it will prompt a switch to other precious metals--white gold, yellow gold and palladium," according to UBS analyst John Reade. I have a feeling that this big spike in platinum prices may mean good things still to come for palladium, and so I haven't yet sold my PAL holdings.

Related Article: [http://www.platts.com/Metals/News/8748768.xml?sub=Metals&p=Metals/News]

HUI and USD Charts & Commentary

Comments: Not crazy about the action today. Sold most of my precious metal holdings after the HUI couldn't break the downtrend line. It's too early to tell though whether we're going to get a swoon, or whether this is just a pause before the Thanksgiving holiday. I'm carefully watching the slope of the 200 day moving average. On the XAU, the slope has turned down, thus confirming the bearish crossover of the 50 below the 200 day moving average. Will the 200 day moving average do the same on the HUI? That would make me more bearish. Right now, I'm just stepping to the sidelines. One other thing to note, is that it looks like today may end on a shooting star candlestick, which can be a bearish reversal candlestick.

Comments: This is the chart that holds the key. We need to keep in mind that above $600, physical/jewelry demand has not proven itself. So it's all about which way the dollar goes now. There's a big move brewing in the USD judging by falling volatility as measured by the bollinger band width. The other indicators (the fact that it's trading below the 50 and 200 day moving averages and below 50 RSI) seem to point towards a drop. But we can't be sure, that's why I've decided to take the more cautious route of stepping to the side, especially after the mediocre action in the stocks today.

Charts of Interest: AUY / SWC / CUP / NEM / KBX

Comments: Now that KBX has breached the 2.35-2.40 resistance, the next target is around 2.67. After that I'd expect some bouncing around beween 2.40 and 2.65 since KBX is now starting to get very overbought in the short term. This chart looks great though, especially after a pullback. I don't hold KBX at the more, but I recommended it to a few (very patient) friends quite a while back and I think it could work out quite well for them eventually.

Comments: I'm a little excited about this stock. After filling the May gap, there's a possibility of a big move up. But it's still risky. Have to keep in mind that they recently announced the resignation of their CFO AND their CEO. Even though no scandal was involved, you kind of have to wonder what's going on. Still, if Copper prices rally in the face of all those people who have been recently claiming that the Copper bull market is over, and if CUP announces any decent new names to fill the places of the departed officers, CUP could be a huge winner and it looks like a speculative buy right here. I hold a bit of CUP in my trading portfolio.

Comments: They keep saying that a platinum ETF is unlikely because the supply is too scarce and so a platinum ETF would disrupt the platinum market. Does that sound familiar to you at all. Bullish on this stock, but I sold today as it looked like it might be hitting the upper channel. But you know me, always selling too early.

Comments: Hankering for a break of the downtrend. It would be helpful if this bellweather stock adopted a more bullish posture. Considering what happend to GG after their recent merger announcement, I actually think that NEM's recently enunciated policy of favoring growth through exploration and addition of smaller pieces rather than rushing towards a big merger is actually bullish for this stock. Investors should at least be assured that the same thing that happened to GG's shareprice won't happen anytime soon to NEM. I'm holding January callsin NEM.

Comments: After a huge run up recently, I expect some consolidation. But eventually AUY could end upa big winner. It's close to its all time highs. Beyond that, the sky could be the limit. Or more precisely, $14. I'm holding January calls in AUY and also have it in my trading portfolio.

FCX / PD Merger

Freeport McMoran Copper & Gold Inc. will acquire copper giant Phelps Dodge Corp. in a $26 billion cash and stock transaction.

Related Article: [http://biz.yahoo.com/ap/061120/freeport_phelps_dodge.html?.v=14]

This is an interesting deal for the shareholders of both companies. The benefits to holders of PD are obvious as the deal is priced at a 33% premium to PD's closing price as of November 17 and the stock is currently trading up 28% as I write this. However, the deal could also be a good one for shareholders of FCX. Richard C. Adkerson, president and CEO of Freeport-McMoRan has stated that the deal will be immediately accretive in earnings and cash flow for FCX, and PD also offers the largest copper reserves in the world of any company. The deal will also enable FCX to diversify away from its dependence on the gigantic Grasberg mine in Indonesia.

Although Adkerson downplayed any possible pricing power issues arising as a result of the merger, stating that "we will be a large company, but not anything like one that will cause any concerns," I nevertheless find it significant that Copper futures were up on the news of the merger, which will create the largest copper miner in the world. I think that says something about the potential leverage the combined company may be able to bring to pricing negotiations as a supplier.

Checking in at the New York Times version of the merger, it sure looks like the NYT still has a woody for Freeport. In the NYT report about the merger, it's hard to tell whether the article is about the merger or about the environmental and human rights "contrversies" that have supposedly dogged Freeport? Or rather, about the controversies with which the New York Times has dogged Freeport? One thing is certain however: those guys at the Times need to focus more on reporting the news and less on pushing their agenda. I think they're losing their ability to distinguish between one and the other. For a company that has had some spectacular lapses in their internal controls (Jason Blair) the NYT sure can get pretty self-righteous and crusader-like about some things, the mining sector being among them.

Related Article: (you have to copy and paste the link into your web browser because the entire link won't fit if I post it as an active link)

[http://www.nytimes.com/2006/11/20/
business/worldbusiness/20deal.html]

HUI Chart & Commentary

Comments: Now that we're caught between the 50 and the 200 day moving averages, some bouncing around between the two is possible before the next move up. The trend is down until proven otherwise.

Last Week Portfolio Gain/Loss: -3.76%. A reentry much too early snapped my 5 week portfolio gain streak. That made me mad as hell. Realistically, it may still take a week or two before we begin the move up again, but I'm probably just going to sit on my positions for now.

XAU 5 Day Timing Chart

Comments: Looks like Gold is staying above $620 after a brief dip below. Gold stocks may be a buy upon a retest of the lower trendline or upon a breach of the upper downtrendline. The 135 XAU area may also offer support. Although the stocks are having a nice recovery rally right now, it's probably best to stay on the sidelines and watch a little longer. It seems a bit too quick for the consolidation to be over and today the minutes of the FOMC meeting will be released so there is always the possibility of negative a surprise there. Even upon a break of the downtrend, I think that the most likely event is a return to the previous high at 142.5, before further sideways consolidation.

How Low?

Comments: How low will Gold go? The $620 area is quite important. below that I think we'll see a slightly deeper correction with the HUI going below its 200 day MA. I think there is a fairly decent likelihood of this happening since we recently had a bearish moving average crossover. According to one projection, I see the HUI going as low as 308. but it seems a bit unlikely that it will fall that low. Still, it's probably best to play it safe now than to be sorry.

I've sold down my precioous metals exposure during the last few days down to about 20% portfolio exposure. STP has been going to bat for me in alternative energy and I just sold HAL stock and calls around the day's highs for a modest profit ahead of its KBR spinoff pricing. These two have helped to keep me in the positive this week, while NTO (which I sold yesterday) was a serious drag on my results. Still, all in all, so far so good. Nursing a modest profit for the week.

I've gradually been raising capital to buy back into gold and silver stocks. SWC, PAL, SLW, GSS, SSRI, and AUY are some of the ones that I will be looking to possibly enter when this correction looks like it has run its course. I know, I know... GSS... not that great a company, but if you've been reading the updates here, maybe you can understand why.

Charts of Interest - STP / PAAS

Comments: STP may be on the verge of a downtrend break. If it does break the downtrend, the next points of resistance would be 28, 30 and 32. with 30 to 32 the most likely next major resistance.

Comments: Relative Strength. Can PAAS stay above its broken downtrend? I'm betting it can. Certainly an upgrade to sector outperform by CIBC while some other precious metal stocks are getting slammed doesn't hurt. Actually, SLW has also been showing a lot of relative strength today

Did I mention that I'm more bullish on Silver than I am on Gold?

HUI Chart & Commentary

Comments: Looks like consolidation time. Let's see if we can maintain above the 200 day MA and the up trendline. I sold a little bit on Friday, though it probably would have been better to sell more.

Last Week's Profit/Loss: +0.38%. Even though my gain was again paltry last week, it was still my 5th straight week of gains. If there is a pullback in Gold/Silver, the trick will be to somehow maintain my winning streak--that's going to be a challenge. This coming week will be very important for me as a trader in how I manage risk.

Current Portfolio Exposure: 47% Energy + Calls; 19% Gold; 15% Silver; 8% Base Metals; 11% Cash. I think I'm a bit over exposed in Energy going into next week. On the other hand, being fairly diversified across the commodities should help to lower risk. I currently like Silver more than Gold on this move. I will be looking to add SSRI, PAAS and/or SLW during any weakness. Also like GSS (I know, it's always in the crapper...)

Update: Golden Star Resources (GSS)

I received the below detailed update about GSS's third quarter results in which GSS swung to a profit of 1.4 cents per share from an investor who has been closely following this stock for quite some time:

"Game winning home run in the bottom of the 9th!

Concerns/results:

* Apparent end of rainy season left Biox start-up in question. / Biox being treated as an existing facility. 75% of needed power already allocated. Shortfall being made up with diesel and Prestea Underground work idled. 3.5mm TPA new plant has already been running for several weeks. Should bring in another 35 - 50,000 ounces of production in Q4.

* Existing Bogoso and Wassa plants could face further power cutbacks. / Not going to happen. Aboadze generating station back in full service any day. Reservoir water levels have risen sufficiently to increase hydro power. These 2 mills are scheduled to produce 52,000 oz. in Q4, even with current power curtailment.

* Lower production meant they could run short of cash while paying for an idle Biox
plant. / Q4 generated $7mm, plus a $15mm credit facility is in place. They have plenty of cash w/o selling other assets. Q4 production between 85-90,000 ounces.

* Potential long term power shortages in Ghana. * New 100 mw power plant being purchased by the miners in Ghana, plus an additional new 160mw VRA power station coming online by mid-year. There is more than enough power for everyone.

Bottom line: Golden Star not only survived, but has turned the corner and returned to profitability. Q4 '06 and Q1 '07 will both feature sequentially higher earnings and higher production. Q2 '07 should hit the jackpot with all 3 mills running at maximum output and processing the most beneficial type of ore at each mill. Throw in Hwini Butre-Benso ore that is almost 3x richer in late '07, and they should hit their 500,000 ounce target easily.

Looking beyond, Prestea Underground should be back in production in '08, and they have ore grading up to 160 g/ton. GSS is back, it'll just take a little patience. The facts are there, but due your own DD in case I missed something.

Democrats' Victory Bullish or Bearish for Gold?

Comments: Gold sold off over $10 on news of the Democrats' success in regaining a majority in the House and closing in on a majority in the Senate, breaking the recent short term uptrend. Is the Democrats' victory bullish or bearish for Gold?

The following factors argue that it is bearish for Gold:

1. The Democrats are likely to be less aggressive and less confrontational in the international arena. A lessening of geopolitical tensions, many of which have been either caused or exacerbated by the U.S. will lead to Gold being less attractive as a currency of safety. For instance, it was reported yesterday that Gold declined a further $5 on the news that U.S. Defense Secretary Donald Rumsfeld was shown the exit sign.
2. It would be difficult to spend more money and cause greater deficits than the Republicans have done over the last few years. The Democrats might be able to put a check on Republican spenders gone wild.

But, the following factors argue that the Democrats' victory is bullish for Gold:

1. Democrats are perceived as being tougher on trade with China. They will likely increase the pressure on China to relax FX controls which will have the effect of increasing the prices of many imported goods in the U.S. leading to possible greater inflationary pressures.
2. Democrats are considered as protectionist, which could hurt the U.S. economy, putting pressure on the US Dollar.
3. Democrats are historically friendly towards social spending agendas which could continue to leave the liquidity spigot open and pouring.

Overall, it's unclear how much will change with the White House firmly in the hands of conservatives. I suspect that this would have been a Gold bearish event if it had happened 4 years ago. Today, with the situation being what it is on the international front and on the domestic fiscal front, at least for the neat future, it probably comes as too little too late.

Related Article: "Wall Street Undeterred, Gold Confused"
[http://www.fnarena.com/index2.cfm?type=dsp_newsitem&n=C99C2FE4-17A4-1130-F542CD7932527CD9]

Do you think that the Democrats' winning a majority in the House and Senate is bullish or bearish for Gold? Let me know what you think.

HUI Chart + HAL + VGZ

Comments: The HUI continues climbing today, despite the ugly candlestick yesterday. Wonder how far this is going to keep on going, with Gold not moving up that much.

Comments: In energy, my pick HAL has been underperforming the OIH, especially today when it is down around 2% compared to the OIH whcihy is off by just 0.5% or so, and I wonder if it is because of the fact that it is possible that Democrats have a chance of winning the elections today. HAL is definitely one of the more political stocks out there. In fact, I think that must be the reason for the recent underperformance.

Comments: Some help is (hopefully) on the way in the form of a bullish wedge now forming in HAL on the 5 day chart.

Comments: VGZ is now trading below the neckline of a head & shoulders pattern after pricing its public offering considerably below the recent market price.

HUI Chart & Commentary

Comments: HUI continues climbing. The uptrendlines are getting steeper and steeper, but it could still run to its target of 345 on this upleg without taking a pause. However, I'm getting a little cautious the higher we go. Would prefer to fully buy back on a pullback than to buy into this strength.

Current Portfolio Allocation: Energy: 34% + Calls; Gold: 19%; Silver: 8%; Short S&P 500: 4%; Cash: 35%.

Last Week's Gain/Loss: +0.78%. A paltry gain considering the action last week, but it still marks the 4th straight week of gains for me so I'll take it. Unfortunately, running into a well-below market pricing of the public offering by VGZ didn't help matters much... Let's see for how many weeks I can stretch my win streak.

I Could See Myself Loading Up on Energy Stocks...

...and doing something like this:

"BP Refinery Gets Bomb Threat: Bomb Threat Is Called in to BP Refinery in Indiana, Boosts Oil Prices"
[http://biz.yahoo.com/ap/061103/refinery_bomb_threat.html?.v=3]

Comments: Interesting volume action in the oil tracking ETF recently. Sign of a bottom?

Comments: Finally seeing some action in HAL, one of the OIH components though I'm still under water in the HAL calls.

(I was kidding about doing the faux bomb scare...)

HUI 5 Day chart + Platinum ETF?

Comments: in what is probably an over abundance of caution, I sold a good chunk of my Gold shares today and yesterday.

Comments: I wonder if the recent bullish action in SWC is due to the rumors of a platinum ETF coming out soon? I usually prefer PAL over SWC, but SWC is more leveraged to platinum than PAL, which is more of a palladium producer.

Link: "Platinum ETF in the pipeline"

[http://www.moneyweb.co.za/education/etfs/374905.htm]

We Have Lift Off!

Comments: Gold looks set to break its downtrend, which all but assures that the HUI will reach its price target at 345. After a surge, I would expect some consolidation in Gold that may go on for quite some time rather than an acceleration straight up. Regarding the HUI, in the short term, the 200 day moving average at 324 may provide some resistance, especially since now we are trapped between that and the 50 day.

I converted all of my QQQQ shorts into gold miner longs the last two days. The general markets are crazy right now. Earnings are pretty good, but guidance going forward is so so and the economic results are coming in pretty horrible. Still, this market is looking like it will seize just about any positive and try to rally on it.

Comments: Silver still needs to confirm the break out in Gold. So far, I don't think it has. It may be time to switch into some silver miner shares soon however since the downtrend break in the RSI seems to suggest that a downtrend break in silver (above $12.50) should be just around the corner.

Comments: I also like OIH (Oil Service Holders) and its components on this pullback. For instance HAL looks pretty decent and I acquired some shares + calls today in it.

I might be switching a lot between Gold, Silver and Oil shares in the coming weeks.