Safehaven | Revisiting The Hui (Gold Bugs Index)

October 18, 2008

Revisiting The Hui (Gold Bugs Index)
by Joseph Russo

Proof is in the Pudding
Due to our intense focus on the major broad based equity indices, we discontinued coverage of the HUI more than a year ago. In going through some routine chart maintenance, we came across an old long-term chart of the HUI, left fully annotated, but unattended for more than a year.

We were not at all surprised to find that after dusting off this old chart that our forecasting guidance maintained ALL of its anticipatory accuracy without the need to make one single change to our count.

A year and a half ago, we provided readers with the article linked below...

From Navigating the HUI April 23, 2007
From its Cycle Degree print low of 35.31 in November of 2000- measured to its print high in May 2006 at 401.69, the HUI has skyrocketed more than 1037% in 5½ years! In contrast, the Gold price itself has only appreciated 192% in the same peak to trough period. In our view, the HUI's meteoric rise has topped, or remains in progress of terminating a first leg up of Primary dimension. Consolidations to date have yet to correct the 1037% Primary Degree advance in corresponding proportion. We suspect a proportionate correction may either take place later this year, or out as far as 2009 in confluence with a potential eight-year cycle low due in Gold.

CHART and Commentary to right FROM April 23, 2007

The chart from April of 2007 (above) updated with price data through October 18 (below) exemplifies the forecasting power of properly applied Elliott Wave dynamics.

Where is the bottom for the HUI?
The first price floor for the large 2nd wave down resides at the (4) wave of one lesser degree at the 165.71 level. A second price magnet for wave 2 down is 175.27 or a 61.8% retracement of wave 1. If our count continues to maintain alignment with classic Elliott Wave tenets, the floor for Primary Wave 2 may go as low as, but should not exceed the 2000 print low of 35.31.

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Joseph Russo
Chief Editor and Technical Analyst
Elliott Wave Technology

Joseph Russo, presently the chief editor and analyst for Elliott Wave Technology, has been studying Elliott Wave Theory, and the Technical Analysis of Financial Markets since 1991 and currently maintains active member status in the "Market Technicians Association." Joe continues to expand his body of knowledge through the MTA's accredited CMT program. Having passed the Level I examination in November of 2004, Joe is now preparing to begin study for his Level II exams. Upon successful completion of an exhaustive level III examination he will have earned the industries highly regarded designation of Chartered Market Technician.