HUI has broken to new all time highs and in the process has eliminated the divergence to gold. But it has done so as the XAU struggles with the same breakout and in an over bought condition. Over bought means that the buying power is stretched and the sector is very bullish. So don't be surprised by a correction. But over bought markets can as they say become more over bought which is why I am not smart enough to trade in and out. With oil finally dropping materially vs. the metal, another major cog in the gold miners' fundamentals may be kicking in here so that one day gold sector traders may once again enjoy that famed leverage to the POG the best miners are known for. FWIW, most of my miners are red today even as the Huey is up and that may be a hint that the sector is ready for a shake out. My miners are generally the little fellers that will eventually offer the best leverage to the gold bull. Patience and risk management remains the modus. Have a great weekend and GO PATS!
Separately, here's Mr. Moskow on just how desperate the situation is for the hopped up financially engineered segment of the economy. Risks are not on the inflation side? Maybe he's right because for gold to hit the inflation adjusted level of oil, using the 1970's as the basis, gold should be over $2000 - hence my oft repeated longer term target.
CHICAGO, Jan 11 (Reuters) - Former Chicago Federal Reserve Bank President Michael Moskow said on Friday that the U.S. central bank is likely to be "very aggressive" on interest rate cuts at its next few meetings.
The Fed "clearly has to understand that the risks are on the growth side, not the inflation side," Moskow said while answering questions from the audience after a speech on the economy to a business group in Chicago.
Moskow said there was still debate about whether the Federal Open Market Committee would cut rates by 25 basis points or by 50 basis points on Jan 30.
"I'm guessing there's at least another 50 basis points there" in terms of rate cuts after January, he said.
Moskow was making his first comments on the economy since retiring from the Fed in August. He is currently a senior fellow at the Chicago Council on Global Affairs.
