$HUI ARCA Gold Bugs Index lost 5 % yesterday, is #Gold next?

As per yesterday's "Gold and silver" post that the ARCA Gold Bugs Index (HUI) wasn't advancing anymore despite the bullion price rising last week. We said this flashed some yellow-lights, a signal to proceed with caution. It was also a divergence.

 

Yesterday the HUI (Gold Bugs Index), after firm moments after the opening, sold off losing 5% on the day. The index also broke through the 50-day moving average on the downside. Usually the gold stocks are leading the spot gold price. The volume was heavy on the downside.

Attachment 2 shows the 30-minutes chart of gold. It shows the sudden drop of the gold price yesterday.

 

 

#Gold & #Silver #COT Silver spec longs highest in 12 months

Commitments of Futures Traders show that

large speculators (hedge funds and money

managers) have increased their long positions.

Net commercial dealers increased their short

positions. The positions are almost the smallest

of the last 12 months (attachment 1).

 

The Gold Barometers reveal that gold stocks

are overbought while the physical gold and

silver are in neutral territory (attachment 2).

 

As the KITCO Gold Survey (attachment 3)

shows Wall Street and Retail Investors are

bullish for this week.

 

The Commitments of Futures Traders show

a complete different picture in silver than

gold. Large speculators continue to build

positions while net commercial silver dealers

are increasing their short positions. These

positions are approaching the highest level

of the last 12 months and are historically

very high (attachment 4). Once the showdown

is coming it will be dramatic.

 

The Gold hourly chart (attachment 5) indicates

the advance of the gold spot price last

Thursday and Friday. Gold closed, as per last

Friday, New York time 4 p.m., at US$ 1,256

per ounce for a gain of US$ 21 per ounce on

the week.

 

Interestingly, while the gold bullion price

rose the ARCA Gold Bugs Index (called HUI)

couldn't advance. The advance of this index

stopped at the 200-day moving average and

the MACD crossed the red line about two weeks

ago (attachment 6). This flashes some yellow

lights, a signal to proceed with caution.

 

Attachment 7 shows the HUI Index and the

Gold price on the graphic just above. It shows

the divergence between the gold mining stocks

and physical gold.

 

 

#Gold & #Silver Commitment of Traders COT Report

Net commitments of Futures Traders show that large speculators (hedge funds and money managers) have reduced their long positions. Net commercial gold traders have reduced their short positions. Both sides are currently not heavy committed in the gold futures market (attachment 1).

 

The Gold Barometer (attachment 2)reveals that gold stocks are currently overbought. However, the physical gold and silver is in neutral territory.

 

The KITCO Gold Survey indicates that Wall Street and Retail Investors are bullish this week (attachment 3).

 

Commitments in silver trading shows that large speculators have increased their long positions. Net commercial silver dealers have increased their short positions. Historically these positions are very large and have reached the level of August 2016. We are unable to explain why the commitments in silver versus gold are so different.

 

We attached (5) the silver long term Point&Figure

chart. As can be seen silver is probably forming a

large 5-year Reverse Head&Shoulder Formation

with a neckline at US$ 22 per ounce. This pattern is

much more bullish than the long term chart of gold.

But the word is not short term but medium to long

term..

 

Gold is in the vault of the Central Banks, hence it is a monetary reserve. In extreme economic situations gold served as safe haven for investors or got confiscated by governments. Most governments don't own any silver anymore. We don't believe that in extreme economic situations silver would be confiscated. In the modern world silver has become also an industrial metal.

 

Attachment 6 shows the gold/silver ratio. The chart shows that the ratio fell in spring 2016 out of an uptrend channel. In other words investors need to buy less ounces of silver for 1 ounce of gold. This is telling you that in the medium to longer term silver is more bullish than gold.

 

Silver producer should seek to acquire more silver mines. Unfortunately they have done exactly the opposite lately, acquiring gold mines.

 

The hourly gold chart (attachment 7) indicates that gold traded during the week between US$ 1,220 per ounce and US$ 1,242 per ounce. As per the close in New York last Friday at  4 p.m. gold traded at US$ 1,235 per ounce for a gain of US$ 2.00 per ounce on the week.