Dec 23
Gold Stocks and Ratios
Posted by Kristjan Velbri | Posted in Gold | Posted on 23-12-2009
Ratios, the price relationships between two prices, are extremely useful in determining relative weakness and strength in the markets. One such ratio is the HUI to gold ratio, HGR for short, which shows the buying power of HUI relative to gold (HUI is the symbol of Amex gold bugs index, a basket of unhedged gold stocks). If the ratio is going up, the buying power of gold stocks is increasing relative to gold. It doesn’t necessarily mean that gold stocks are going up – the ratio will go up in two cases a) gold stocks are going up faster than gold b) gold stocks are going down slower than gold. Adam Hamilton and his subscribers have been using the HGR for a long time and here is an excellent primer on using that ratio as it applies to this very week. If you enjoy his writings, proceed to his essay archive.
