So the retrace happened. Annoying.
Below are some updated HUI:Gold ratio charts.
I'm still seeing some hope in these charts. Firstly the big and unusual squeeze (repression) of the prices of gold stocks that started in full force in early May has been broken by the recent rally and although the rally didn't push higher (ie through my crucial 10 level on the BB width) we are now back to more normal volatility levels and the BB width on the Hui:Gold ratio is sitting back a level where it is more "free" to move (higher or lower).
Looking at the Ichimoku indicators, the week before last, we saw the Tenkan-Sen line cross the Kijun-Sen line but in terms of the previous long entry this cross is ignored as it didn't occur below the cloud (ie it's not a signal to go short).
P.S. - We still have the previously mentioned caveat in place on the long entry cross of these indicators as it occurred just within the boundary of the cloud, so in strict technical terms it wasn't a valid long entry (although in practice it turned out to be a very good signal IMO).
The BB width is on a shallow rising trajectory again this week indicating that the HUI gold stocks are slightly outperforming the gold price which is a positive sign that the buying momentum from the short lived rally is still in play although weak (not that you would notice that from the action on the RSG share price).
The rally in the gold price was killed off by the recent Fed speak and interest rate expectations and it seems as if the bond market for US treasuries played along with the rhetoric this time around as yields on the 10 year treasury notes continued their 3 week move upwards. This has real potential to kill off the gold price momentum if it continues in the next weeks and is definitely something to watch. It's most dangerous for gold when the Fed rhetoric and the bond traders start to get in sync and real interest rates start are rising to more normal levels. The yields on most European and Japanese bonds of equivalent duration are still very low <1% so I can't personally see the rally in US bonds yields (increasing US interest rates) as sustainable. The rigged markets are capable of ignoring anything at the moment but real rising interest rates in the US will slow activity in the real economy which is fundamentally the engine that underwrites the ability of the US government to pay for and expand its debt.
As far as RSG goes all this short termism commentary I've been reading on these threads is missing the picture IMO.
RSG is a medium term play based on the successful completion of highly sophisticated long life mining operation that should in theory return high margins. It either succeeds or fails. Wishing to buy in at lower prices is foolish in my opinion as those exact lower prices might actually be signalling that the mine is on a path to failure, in which case you certainly wouldn't want to invest. When I see depressed share prices and Macquarie Bank circling around that is a positive sign for me (see WSA's recent performance for example, shorted to buggery then allowed to run).
I see RSG as becoming the biggest success story in the ASX gold producer space in the next 2-3 years or possibly the biggest failure story. RSG is still being priced for success at these levels IMO. God help everyone if it starts getting priced for failure. Esh
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