I posted this letter to my friends today, and it's intended for readers with some technical knowledge of the gold and gold mining markets:
Assuming gold swoons to $1400 or so, or stays higher, that means the low for the HUI would be 275-300, vs its low of 150 in 2008.
With the HUI at 375 today, gold at $1545, etc., I'd say the numbers stated above are the visible bottom. That is much lower than I expected, but the HUI and gold would both double their 2008 lows, which sounds a bit fractal to me.
My call: HUI:GOLD .204; HUI 275-300, Gold $1400 or so ($1360 is double the 2008 low). I'm not happy about this, but it's twice the Oct 2008 level.
On a positive note, so long as we're thinking it's a fractal double (remember, the sellers will be extinct), then the upside target for the HUI is an optimistic 1275, so who's complaining? As they say on the street, we're closer to the bottom than the top, and we're certainly finding the bottom in a hurry! I'd be a buyer at HUI 300, and there's probably no rush to take action before then!
I also expect gold to lead on the way back up while the broad market continues to fall, as we're getting some kind of revisit of 2008 for some reason....(More thoughts later, maybe???)
Here is the HUI:GOLD chart:
Hold on everybody. It will be steep and hard, but relatively brief at this juncture!
NOTE: Dan Norcini has thoughts similar to my own. Click here for Dan's thoughts on the current rout (a consequence of the parabolic September 2011 blowoff in the gold price, by the way).