Elliot Wave Analysis: How High For The Gold Bugs Index (HUI)?

by: The Silver Analyst

Roland Watson (The New Era Investor) submits: Gold and silver stocks are rising again after a long corrective period of a year and a half. Indeed, the initial rise in stock values has been remarkably bullish and there seems to be an open sky above them.

But since all bull markets come to an end, then at some point in the future it will be time to fully cash in those gold and silver mining equities and (at least for a while) reinvest the profits in other more attractive markets.

The aim of this article is to indulge in some speculation and attempt a guess at where this may end based on Elliott Wave theory and have a look at the HUI bull market to date. The chart is shown below and expresses a simplicity that betrays potential information on where this bull market may ultimately be heading:

The Elliott Wave count has been presented in other articles and the double bottom of the recent long correction at about 163-165 is evident for all to see. The larger numbered waves of 1 and 2 shows us that a marvellous prospect lies ahead for gold equities and those who are prescient enough to own them.

So, wave 3 is now with us and being a statistically longer wave than wave 1, it has wasted no time in displaying its superior bullish credentials.

Those who see no value in the impulse wave theory of Elliott Wave ought to compare it to the three stages of a bull market that is often touted in various gold discussions. The first move up is classed as the “smart money