The HUI index continues it’s correction since the Gold peaks in early December.  On December 4th, I updated my partners on Gold forecasts and I was looking for $1040-$1070 as pivot lows for Gold.  We have been as low as $1074, but we are still looking for the final leg down in the C wave of the Gold correction.

Gold stocks will tend to reverse to the upside just prior to Gold bottoming, and we are in the final stages of the gold stock pullback it seems.  I’m looking for the HUI index to pivot around 377 from the current 398, which is only about 5% lower than Jan 25th closing levels.  This is the time period where you can “scale in” to a few gold positions like GSS or GOLD, or pick some others that proxy the Gold moves well.  I like to trade the GSS because it tends to perform well when gold is bottoming and turning up, and I like to catch the final downswing.  This appears to be one of those windows where one can scale into GSS with a stop at 2.75 for conservative traders.  More aggressive traders can look to build bigger positions at 2.50-2.65 ranges should the 2.75 pivot not hold.

Look for the HUI to continue downwards for another several days, and then reverse sharply as Gold gets close to a bottom.  If the 377-378 pivot area on the HUI index does not hold, it would indicate gold is dropping to the 970-980 ranges.

Dave Banister