Are you keeping a close eye on the gold stocks market? If so, you may have noticed some similarities in the current trends with those of the past. The HUI Index chart, often used as a proxy for gold stocks, is showing patterns reminiscent of the major declines we saw in 2008 and 2012-2013.
It appears that we may have recently hit the peak of the right shoulder in a broad head-and-shoulders formation, as indicated by the green rectangles on the chart. An interesting detail to note is that the right shoulder corrected approximately 61.8% of the initial decline from the “head.” This pattern has been observed in 2008, 2012, and most recently in 2024.
After Friday’s slide, gold stocks dipped below the 38.2% retracement level. History has shown that when we see a similar situation in 2008 and 2012, the declines tend to persist, with only minor short-term rebounds and no substantial medium-term rallies until reaching much lower levels.
Currently, we seem to be transitioning from the phase of “PR is ridiculous as miners are soaring” to “PR might be onto something, but this still FEELS bullish.” While no one can guarantee the accuracy of predictions regarding significant declines, the likelihood of such a scenario seems strong. Once we reach the phase of “PR was right all along,” the current opportunity may have passed.
And let’s not forget to consider the situation in the forex market as well.
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