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HUI/GLD Stretched To Downside

ByTim Knight
Published 07/26/2015, 11:51 PM
Updated 07/09/2023, 06:31 AM

A reader pointed out to me that the ratio of the gold bugs index (HUI in ProphetCharts) versus gold (ARCA:GLD) had never been lower. I looked, and it actually had been lower back when gold was around $300 per ounce, but there’s no doubt that the chart is very, very stretched to the downside. I’m still counting on, and positioned for, a bounce in precious metals and the companies that mine them in the near-term.

HUI/GLD Chart

I also couldn’t help but notice how many energy-producing stocks looked similar to gold miners. For some reason, I’m not quite as comfortable going long individual energy producers. I may, however, decide to take on a decent-sized position in NYSE:XOP in case oil and related companies appear to be firming up Monday morning.

XOP Chart

Latest comments

I also remember there was a well documented visit by CNBC's Bob Pisani to GLD's gold vault. This visit was organized by GLD's management to prove the existence of GLD's gold but the gold bar held up by Mr. Pisani had the serial number ZJ6752 which did not appear on the most recent bar list at that time. It was later discovered that this 'GLD' bar was actually owned by ETF Securities.
Hello Mr. Knight, you seem to have some familiarity with GLD. I've been trying to do my due diligence on the fund but have encountered some difficulty in finding specifics of its insurance. Would you happen to know any details on this matter? I've found the following to be very relevant: "Did anyone try calling the GLD hotline in search of numerical details on GLD's insurance? The prospectus vaguely states "The Custodian maintains insurance with regard to its business on such terms and conditions as it considers appropriate which does not cover the full amount of gold held in custody." When I specifically asked for clarification on this clause and about how much of the gold was insured, the representative proceeded act as if he didn't know and said they were just the "marketing agent" for GLD. What kind of marketing agent doesn't know such basic information about a product they are marketing? It seems like they are deliberately hiding information from investors."
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