Finally we turned the corner in gold stocks. The trend is now UP! The XAU and HUI closed above their resistance downtrend lines yesterday and, more importantly, both the XAU/gld and HUI/gld ratios did too. Over the past few years, more than anything else, the changes in the trend of THESE two indicators have been the most reliable signal of trend changes in the overall gold market.
The last time we saw downtrends in the XAU and HUI reverse their course, both the XAU/gld and HUI/gld ratios snapped back. This was back in March after the March bottom. History is now repeating itself right in front of our eyes and that means we can expect to see gold stocks march higher over the next few weeks. The next resistance point on the XAU is in the 145-155 area. We'll likely get there sometime during July, then consolidate for a few weeks, before breaking out again at some point in August to launch the next big bull run.
Yesterday's action was what I was looking for back in May. If you can remember, the XAU and HUI consolidated and began to trade in a very narrow range. It looked like it was going to break out. Instead both touched their resistance points and then fell straight down. BUT, this time we finally got the key breakout. And not only that, it has come after last week's bottom.
When we look back at all of this action a year from now we'll be able to point to June the fourteenth as a key day for gold stocks. The day before, gold stocks and the metal closed on lows. Then on the fourteenth both gapped up on the open. Gold then plunged around 40 points while the XAU held up and finished strong going in to the close. That was the type of positive action you see at major bottoms for gold stocks. Knowing that this happened last week makes the downside very limited for getting in now or continuing to hold.
To find out what gold stocks Swanson is buying now join his free weekly gold report. Start now: http://wallstreetwindow.com/weeklygold.htm.