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Gold Bottom: HUI, Gold and Mining Stocks Signal a Bottom
Pinnacle Digest writes: History can be used as a guide not to predict exactly what will happen in this market cycle, but what will likely happen. Jordan Roy-Byrne believes the current bottom in the precious metal market is comparable to major bottoms of 2001, 2005 and 2008.
In 2005 and 2008, silver bottomed months after gold and the HUI Index. In both periods, gold and the HUI Index confirmed their respective bottoms within a span of 6 weeks, whereas silver took months. In the current, emerging rebound of gold and gold equities, silver continues to lag significantly. Silver has lagged following every bottom in precious metals. Jordan expects silver to continue to lag for several months.
We are reminded that the HUI Index typically retests previous lows within seven weeks. There is strong evidence suggesting the GDX/HUI will not retest its lows hit in March and April. The latest Merrill Lynch fund manager survey clearly shows a heavily underweight materials position by fund managers. Many of our Pinnacle Professors have exposed this underweight tendency of portfolio managers in respect to the materials sector. This suggests a coming surge in buying for precious metals and, specifically, large cap gold miners. An obvious trigger may be the Fed's FOMC meeting tomorrow.
Jordan states that it, "Looks like its time for Joe Hedge Fund to dump his Starbucks and tech stocks and buy some gold stocks."
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