One aspect during Gold's price increase that I have noted as disconcerting is the relative lagging performance of the Gold stocks. I use the HUI index as a proxy for Gold stocks.
As one can see on the daily chart below, the Gold price is reflected in the top of the chart, followed by the HUI:Gold ratio and then HUI in green:
chart courtesy of StockCharts.com
The HUI index has lagged since approximately the beginning of 2008. Perhaps the main question is if/when might it start performing better? One potentially bullish sign is a potential Cup and Handle formation with the two peaks above 500 and current upswing serving as the "lid" and "handle" of the Cup and Handle formation, respectively.
Of course, this Cup and Handle formation is very tentative at this time. It is simply something to monitor. However, should this C&H formation "play out" with the HUI strongly advancing above the prior peaks above 500, one could reasonably expect the gold price to react positively if not very much so. Should it not play out, i.e. the HUI price falters or declines from here, would likely be a bearish omen for Gold.
As I have pointed out in previous posts, Gold's price can have very important implications from many financial and economic perspectives. However, due to the complexity of the factors that determine Gold's price, it can be very difficult to predict its price movements.
SPX at 1066.43 as this post is written
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