Bullishly Giddy on Precious Metals

| About: SPDR Gold (GLD)
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The precious metals (PMs) didn’t give me one more chance to add to my positions yesterday morning. Instead, they came out of the gate charging and never looked back. The Gold Bugs Index (HUI) finished up over 5% at 344.71.

Since I’m close to fully committed in my PM allotment, I have nothing to complain about. In fact, this was the kind of ferocious action I had in mind when I said I was switching to the mindset of accumulation before the lift-off of wave 3 and III. Overall, I’m quite happy with my earlier call on the shape of this correction despite that little head fake along the way.

Alright, before I get ahead of myself, let’s be clear that it’s critical for the HUI to get above 353.5, its previous high in July. With luck it may succeed as early as today since both daily MACD and stochastics are confirming today’s move and spot gold and silver are up overseas as of 8:40 pm last night. From there I would expect a fairly quick move up to retest the 390-400 range. We are not out of the woods yet but this is the most optimistic I have felt since this correction started in May.

Today’s PM rally accompanied a down day in the major indices. The volume was anemic (as are the PMs actually), so we’ll have to see how the rest of the week plays out. In keeping with my bearish views on housing, especially after some late night reading at CalculatedRisk, I added some PHM shorts this morning (300 sh @ $29.39). Incidentally, the financial blogger poll conducted by Ticker Sense showed a big uptick of bullishness for this week. Could the bloggers, collectively, be considered dumb money? I shudder (No, I’m not part of the poll).

HUI 1-yr chart:

HUI 1-yr chart