The HUI- 3 of III Momentum Run

In general, 3rd waves in the Precious Metals stock universe tend to be dominated by intermediate producers and soon to be intermediate producers. With that said, we appear to be at the juncture where the large cap PM stocks tend to start to move much better, and where the smaller explorer class starts to kick up it's heels. Of course, we still expect the intermediate PM stocks to continue to perform very well.

In the first chart we can see that the HUI Index is continuing to exhibit its fractal relationship compared to late 2005 and compared to the primary fractal in early 2002. The HUI has now broken out and appears to be completing a re-test of the top. It looks like the time for the mark-up phase in the larger cap PM stocks is upon us. I have marked similar points in the HUI chart to show the similar characteristics to the 2005 period.

The next chart of the HUI shows the similar price movements and indicators in the primary fractal of wave 3 of I (2002) versus the current 3 of Wave III movements. We can see that at this juncture in the Wave 1 fractal, price rose up to the angled line that extended off of the top of wave 1 of I. Thus, we expect the price rise into May/ June of 2011 to rise up to the angled line off of the top of Wave I. The similar rises in 2002 and 2005 were about 1.18 times (1.16 to 1.18) the height of the cup, added to the top of the cup. Thus, our potential target into May/ June of 2011 for the HUI lies up around 940 to 970. We'll use the chart as a potential target zone and see how it plays out. Above the HUI chart I have plotted 3 large cap PM stocks that have underperformed as of late. I'd expect these stocks to perform much better into May/ June of 2011.

Since few investors actually invest in a PM Stock Index, we primarily need to track the progress of the individual stocks that we do invest in. Yet, tracking the charts of the major stock index helps to give us a better feel of what the sector is doing as a whole. Below, is a chart of GFI showing the very large cup formation that has developed. We have shown how GFI acted in the 2002 period in a similar cup environment that matches up at one degree lower of Elliott Wave Fractal Degree. We can see in the chart of Gold in Rand plotted above the GFI chart that Gold in Rand is mired in a triangular correction. If we see a break-out of that triangle in Gold in Rand to the upside- we'd expect a rather explosive rise in the chart of GFI. We have circled on the chart a very similar triangle break higher in Gold in Rand back in late 2001 that powered GFI into the huge 3rd wave rise in Wave I. Historically, South African Gold Stocks have had huge 3rd wave moves relative to the other waves.

GENERAL NOTES

1) It looks like the juncture for the large cap stocks to start to run is close at hand. Yet, the intermediate producers and soon to be producers are still the sweet spot of investing at this time. Thus, we tend to favor stocks like NSU that should be producing, soon. Charts suggest a potential target of 16 to 18 on this run- maybe as high as 22. NGD is another. Charts suggest a potential target of 22 up to a possible 28. If the HUI bust out as the charts suggest, we'd expect a higher sloped rise in the intermediate producers along with that HUI rise…………read in "GR terms" that means that I expect NSU and NGD to bust vertically out of the tend channel they are currently rising through.

2) The explorer stocks are starting to run, and we'd expect them to perform much better into mid 2011. Many of these charts have exhibited a "low chop" rise that is breaking out. The next target for many of these charts will be the "old highs."

3) Per the LT fractal back to the 70's, the PM stocks still might have 90% of their gains ahead of them before this PM Stock Bull is over. We have only reached the top of a mole hill on our trip up the mountain, it seems.

4) A few months, ago, we had outlined a potential range for $Gold to rise into in mid- 2011. We placed that range at 1800 to 2100 with a mean of around 1950. There is angled line resistance around 1875 in that time-frame that might serve as stiff resistance, yet, the potential for Gold to rise up to around 2250 into mid 2011 is still there. With the above noted, we will simply track the rise in Gold to see how it plays out.

5) We have a basic website ready for what will become our subscription site. We are still working on many things such individual PM stock charts, new LT charting software, etc. Anybody who wishes to be contacted when we open up the site can send an e-mail to …. [email protected]

Below, is the link to the Gold-Eagle Forum ………..

https://www.gold-eagle.com/cgi-bin/gn/get/forum.html

Special thanks go to Dr. Vronsky and Westerman for creating the Gold-Eagle site and for editing my work. A very special "Congratulations" go out to Dr. Vronsky and Westerman after Gold-Eagle saw its hit counter ring up 387 million this last week.