A week ago I wrote about the fact that Gold stocks are the cheapest they've been since early 2009.
I significantly increased my exposure to Gold stocks in the several days leading up to that post as the crashing market provided some good buying opportunities.
I am still holding those positions, although at this point they are still only a little above break even as a whole (the new positions, existing stocks held are still well in the green from where I bought them). Disappointing performance really given Gold's resilience to a large sell off.
At the time I wrote the post the HUI:GOLD ratio was at .31 and in yesterdays trade we'd only seen an increase to .32 (HUI Index since my post has risen from around 550 to 580).
What concerns me is that the HUI is forming a similar pattern to that seen in the early 2008 top where a head and shoulders pattern formed before crashing to roughly 30% of the peak later in the year.
Given that Gold is currently trading back above US$1800 I would like to think that the HUI can breakout and nullify the H&S pattern.
For now I continue to hold open my larger position in Gold stocks, but I would be much more comfortable if we saw a new high & close above 610 on the HUI.
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