higher low?, page-25

Gold now firmly in short term uptrend including in AUD as well now (currently $1385) despite a higher AUD (or actually a lower USD).
However despite higher gold last night, the HUI was flat. Not an encouraging sign but it might be specific to the companies in the HUI. They have not had the benefit we are seeing with our dollar backing off from record highs. While our producers saw the low for POG back in April, the overseas majors have been putting up with significantly lower POG since April. The average price in April was around US$1470 and it is now still only US$1270 even after this rally off the low That is still below breakeven for many mines using all in costs and almost certainly low enough to delay many if not most new projects. If it only comes up slowly from here, they will still be hurting for some time and may be coming out with further broker downgrades, company profit warnings, production cut backs etc. The other problem with the HUI may be the US market is near record highs again and so is at risk of a double top. That adds general equity market risk for the US gold equities. It’s not just the US market though, the UK is near record highs as well and the German market is at a record high. Korea made a record high last year and Japan has rallied 50% in a year. China by contrast is close to 2008 lows with Hong Kong and Australia around midway between 2007 highs and GFC lows. If gold does continue higher even slowly but our dollar continues to weaken then our producers may have the worst of bad news behind them with the low for the POG occurring three months ago back in April, although there may be one last lot of negative news in some of the quarterlies due out this month. After those quarterlies, it may be safer trading. If gold continues to rally hard, those quarterlies may be brushed aside as the market looks forward. All this assumes gold has bottomed and of course this can not be known yet despite this encouraging reversal higher.