Today I would like to do technical analysis of the Gold Bugs Index, the HUI.
A common way of leveraging the price of gold is to invest in gold mines.
The way that I look at the gold is that it’s very much the same as buying a currency.
To invest in gold mines is fundamentally different from buying gold because you are actually buying equity.
Sometimes these stocks pay out a dividend which means that you can take advantage of compound interest the same way as with any other stock.
The Gold Bugs Index
As always I look at a weekly chart when I do my analysis:
Figure 1. Weekly chart of the Gold Bugs index from 2007 until now. 50-week moving average is represented in blue, 100-week moving average is represented in white, ascending and descending trend lines are also in white. Chart: FreeStockCharts
What we can see in the chart is that the trend changed direction and headed downwards in 2011 and that the trend was down all the way to 2016.
Then in 2016 the trend changed and increased almost 300% in just a few short months.
The trend then changed again mid-2016.
But one thing that did not change was the direction of the 50-week moving average. It is still trending upwards.
The chart is now between the rising 50-week moving average and the rising trend line that can be drawn between the bottoms of 2016 and 2017.
I personally don’t think that prices will go down very much in the medium term because of the rising moving averages and trend lines.
Therefore there could not be a better moment to enter the market than this.
The post Technical analysis of the Gold Bugs Index – Thursday, March 2, 2017 appeared first on LJ Nissen's blog.
