Gold & Silver Trading Alert: HUI to Gold Ratio at Its 2000 Low

Jon Economy, Gold, Market Commentary, Precious Metals, Silver

Briefly: In our opinion speculative short positions (full) in gold, silver and mining stocks are justified from the risk/reward perspective. We are adjusting the stop-loss levels (again), so in a way we are locking-in even more of the profits from the current positions and, at the same time, keeping a chance of increasing them.
Gold, silver and mining stocks plunged heavily last week. We saw major events such as breakdowns and we saw some key levels being reached. The miners’ slide and the silver’s and gold’s breakdowns were widely commented, but there are additional developments in the ratios that investors and traders need to consider at the moment.
Before moving to the ratios, let’s start with the U. S. dollar (charts courtesy of
In the previous alert we wrote the following:
What’s next? The cyclical turning point is at hand, so we might not see many more daily upswings in the near future. The closest resistance is at the previous October high, about an index point above Wednesday’s close. Consequently, we are quite likely to see another sharp upswing, but it also seems likely that the USD Index will at least pause after reaching its previous high, at or close to the turning point.
We indeed saw a sharp upswing in the USD Index yesterday and also in today’s pre-market trading. Today, the USD Index moved to 86.74, which is very close to its early-October high of 86.87. We could see a pause or another decline from here, especially that the cyclical turning point is at hand. The situation in the currency market is very interesting at this time (especially in the USD/JPY pair) but that’s something that we will discuss in today’s Forex Trading Alert.
The USD Index moved even higher – to 87.25, but closed only slightly above the previously-broken level. It’s still quite likely to decline given the unconfirmed status of the breakout and the cyclical turning point. Consequently, the above remains up-to-date.
Let’s move to metals. Has the outlook become bullish for the precious metals sector based on the above? Just as we wrote in Friday’s alert – not necessarily.

This post was published at GoldSeek on 3 November 2014.