Intellectually, it's quite simple to reject some of the preconceived lines of thinking with respect to Gold's monetary orientation. The fundamentals for Gold have, quite likely, never been better. Unfortunately, the game afoot is not about restoring honest money, but driving it out of the market's broad conscious, displacing it with ever greater quantities of Central Bank confetti.
We appear to be in a somewhat confusing race back to the 200 day moving averages on both the XAU & HUI. It is very important to note that Gold has led the Broad Markets both ways recently. Certainly some would argue Gold's action lately has been a cause & effect matrix of the Federal Reserve's willingness to open the monetary spigots most recently pouring more fuel on the bubbles ablaze thereby injecting a much need bid in the futures pits.
The relief should be short lived in my opinion and Gold will certainly broadcast the next decline for the Markets. Gold is merely working off an oversold condition with mild conviction. This is not the end of the Gold correction and I suspect June will be a difficult month for both Gold and the Markets. We should begin to top near the 200 day moving averages with perhaps a short burst up and over them for a day or two.
After this, we should begin to see renewed Central Bank selling and a further declines ahead for both Gold and mining equities. I would use this period as a time to lighten up on trading positions and be looking at even greater bargains ahead for the mining equities.
The Fed should begin a reckless campaign of massive hyper-inflation by late July to early August. We will want to be back invested in the mining sector ahead of this malfeasance. Buy the metal on the ride south will be an excellent opportunity to preserve your wealth and purchasing power for the very rough times ahead.
I hold open the following levels:
Gold: $342 - $353, a break of $368 should confirm.
HUI: 92 - 118, a break of 162 should confirm
XAU: 64 - 72, a break of 75 should confirm