Golden Minerals Company

MARKETWATCH - HUI index analysis - READY FOR THE BIG BREAKOUT?...

originally published August 27th, 2010

• MARKETWATCH - HUI index analysis - READY FOR THE BIG BREAKOUT?...
  August 27th, 2010
• FALL CRASH update...
  August 15th, 2010
• BIG GOLDS at POINT OF BREAKOUT - review of AEM, GG, KGC and the GLD ETF...
  April 26th, 2010

Before reviewing the charts for Samex Mining, which is just one stock, it is high time we took an updated look at the HUI index chart, in the light of the sudden strength in silver - for the charts of the HUI index and silver are very similar, and so it follows that if silver breaks out to new highs then the HUI (and other PM stock indices) are going to do likewise.

We have been perfectly justified in being wary in the recent past, for as we can see on its 4-year chart, the technical condition of this index has been very shaky for weeks, which is a reflection of the lurking menace of another deflationary downwave hitting, but the silver breakout this week is telegraphing that this danger is probably going to averted into the foreseeable future by additional bouts of Quantitative Easing (money creation) and monetization, regardless of the longer-term consequences, one of which must be rampant inflation, hence the brightening prospects for the Precious Metals sector.

The action in silver suggests that there is a good chance that it will follow through and break out to new highs, and if that happens, then the HUI index will also break out to new highs, and if it does, it will be a MAJOR TECHNICAL EVENT as it will signify that selling around these levels has finally been exhausted. The sector will thus be in position to advance swiftly. As we can see on the chart there is still everything to go for with respect to a possible major uptrend developing, AS IT HASN'T EVEN STARTED YET. So while it can be said that we goofed up by being too cautious in the recent past, we don't plan on compounding the error by missing out on the major uptrend that now looks probable. What if the current setup is yet another trap? - the way to handle this situation is very clear cut and simple, you take long positions now in the best stocks, hedge any open short positions to get at least part of your money back, and be ready to either bail out or protect long positions with Puts in the event that the major uptrend shown on our chart fails.

In accordance with our now positive interpretation of this chart, we will be looking at a raft of better PM stocks in coming days, with the intention of taking positions ahead of the major breakout, which should lead to a dramatic advance.

It's small wonder that the markets have been highly erratic in the recent past. Those in charge of things are like a drunkard in charge of a steamroller. They have and are causing devastation to the US economy, and since they know what the results of their actions are likely to be, whereas a drunkard may not, they are actually like that guy in a small town in Colorado several years back, who intentionally went on a rampage in an armored earth moving machine and wrecked the town. The only thing that we can be sure of is that their number one priority is to look after themselves, which means bailouts, QE and monetization for as long as they can get away with it.