A Treasure Map for 2007 The Hui

January 1, 2007

The monthly chart of the HUI is providing us with the maximum amount of information concerning its future path that we could ever hope to obtain from any chart. The monthly chart is also providing us with the highest probabilities and huge odds that it will not only continue to rise but will continue to accelerate its rise. This is more information about the future than we should expect from any chart. The only thing missing is certainty. The search for certainty in the markets is a useless and wasteful endeavor. There is no alternative to doing the work necessary to interpret the information that the monthly chart of the HUI is gracious enough to offer us. This information is not difficult to interpret and it is easy to read. Just don't think of it as a guarantee. Think of it as overwhelming odds in favor of an accelerated rise in price. I use the monthly chart of the HUI because it is the chart that has provided and continues to provide us with a treasure map with near perfect directions to the mother lode. This "perfection of direction" is not seen in the XAU or GDX. The shares in the HUI provide us with greater performance leverage than the physical possession of gold and silver. However, we all know that it is wise to own gold and silver coins. The following monthly charts of the HUI demonstrate the perfection that I am referring to. We know that the HUI is a creation of the American Stock Exchange. Those individuals responsible for the creation of the HUI have knowingly or unknowingly given us a gift of huge proportions. The HUI is a treasure map that shouts: "Follow me to the pot of gold."

The first phase of the HUI came to an end after there were three consecutive rises interrupted by two corrections. The chart below shows that the first phase or major wave ONE ended in December 2003. The rise began at 35.31 in November 2000. The first phase or major wave ONE ended at 258.60.That was an increase of 732 %. It is very important to notice that each wave or rise was larger than the previous wave. The first wave was a rise of 44.33 points and consumed about six months. The second rise was 95.13 points and required 7 months to complete its work.. The third rise 145.99 points and consumed about 9 months. When major wave ONE was complete the HUI embarked on a major second wave correction. The HUI made a flat type correction that concluded in May of 2005 and consumed 24 months before breaking out to new highs. The major wave TWO correction was complete at the low of 165.71.The HUI then rose to a high of 401.69 in minor wave 1 of major wave THREE. This was a rise of 235.98 points in 12 months. The sequence of the first 4 rising waves looks like this: Rise one = 44.33 points Rise two = 95.13 points Rise three =163.97 Rise four = 235.98 Clearly each rise was greater than the previous one. The HUI has either completed a minor wave (2) correction of major wave THREE or will be finished soon. The next move up for the HUI will be the third of a third wave. This is usually the wave that creates the most excitement. Extensions and gaps to the upside will most likely accompany the rise of the third of a third wave.

HUI MONTHLY # 1

"Third waves are wonders to behold. They are strong and broad, and the trend at this point is unmistakable. Increasingly favorable fundamentals enter the picture as confidence returns. Third waves usually generate the greatest volume and price movement and are most often the extended wave in a series. It follows, of course, that the third wave of a third wave, and so on, will be the most volatile point of strength in any wave sequence."….Elliott Wave Theory

In addition to each rising wave being larger than the previous one, every corrective low for the past six years has remained above the previous peak. The chart has horizontal lines drawn to show this particularly endearing feature of what I consider a remarkably bullish performance. This feature is intact to this very day.

HUI MONTHLY # 2

A truly remarkable performance is the fact that each corrective leg within a correction has remained above the low of the previous leg in that correction. I am running out of superlatives to describe the ascent of the HUI to heights as yet unknown. However, I believe I have a few remaining.

HUI MONTHLY # 3

The HUI has experienced two minor corrections and one major correction and is currently either completing another minor correction or has completed it at the wave [a] low of 270.54. All four corrections of the past six years have contained three legs. Wave [a] is down, wave [b] is up, and the final leg [c] is down to complete the correction.

Over the past six years each peak has been higher than the previous peak and each low has been higher than the previous low. There is little more that we could ask a chart to do other than keep repeating this truly unusual and nearly perfect performance. The only reason I say nearly perfect is because I may have overlooked something else this chart could boast about. This is our treasure map par excellence.

There is a technical measure that is worth demonstrating once again. It is the MACD on the weekly HUI chart posted below. I last mentioned it in the December 22, 2006 Report.

HUI MONTHLY # 4

The MACD technical indicator is one of the additional tools that I use. It has worked well with the HUI index. It is giving us an early warning of a substantial rise in the HUI index.

MACD

"It is clearly understood that crossovers will signal the beginning and the end of both uptrends and downtrends. Much has been written over the years about the centerline of the MACD being the key to the strength of the indicator, and I could not agree more. When the crossover occurs, whether indicating a buy signal or a sell signal, knowing where it happens in relationship to the centerline is going to determine just how strong the movement is going to be, either north or south."

"If the fast line crosses over the slow line above the centerline it is understood that a bullish trend will continue."

HUI WEEKLY

THE MACD CROSSES BULLISHLY ABOVE THE ZERO ( -0- ) LINE.
XAU WEEKLY
THE XAU CROSSES BULLISHLY BUT BELOW THE ZERO (-0-) LINE.
The chart of the XAU shows that its performance can not be compared to that of the HUI. The lows of the XAU have violated and gone below the peaks of the previous waves. The most recent correction shows that the corrective lows within that correction have gone lower than the previous leg. This is contrary to what the HUI has consistently accomplished. However, the XAU has made a series of higher highs and higher lows. The reason for this relatively poor performance compared to the performance of the HUI is attributed to the fact that the XAU has a number of mining shares that have hedged their forward production. The XAU has risen from a low of 41.61 to a high of 171.70 or about 412 % over a six year period. The HUI has risen from a low of 35.31 to a high of 401.69 or about 1,137 % over the same period of time.
XAU COMPONENTS
ABX 20.9% BARRICK GOLD CP     GOLD 1.3% RANDGOLD RES LTD
AEM 3.7% AGNICO EAGLE MINES     HMY 5.0% HARMONY GOLD MNG A
AU 10.2% ANGLOGOLD ASHANTI     KGC 3.3% KINROSS GOLD CP
CDE 1.0% COEUR D ALENE CP     MDG 2.3% MERIDIAN GOLD INC.
FCX 8.3% FREEPORT MCMORAN B     NEM 16.5% NEWMONT MIN CP (HLDG)
GFI 7.6% GOLD FIELDS LTD ADS     PAAS 1.4% PAN AMER SILVER CO
GG 16.0% GOLDCORP INC     RGLD 0.7% ROYAL GOLD INC
 

HUI COMPONENTS

 

AEM 5.11% AGNICO EAGLE MINES     GSS 4.88% GOLDEN STAR RES LTD
AUY 5.18% YAMANA GOLD INC     HL 5.40% HECLA MINING CO
CDE 4.92% COEUR D ALENE CP     HMY 4.94% HARMONY GOLD MNG
EGO 5.25% ELDORADO GOLD CORP     IAG 5.08% IAMGOLD CORP
FCX 9.30% FREEPORT MCMORAN B     KGC 5.06% KINROSS GOLD CP
GFI 4.92% GOLD FIELDS LTD ADS     MDG 4.94% MERIDIAN GOLD INC.
GG 15.31% GOLDCORP INC     NEM 14.34% NEWMONT MIN CP (HLDG)
GOLD 5.12% RANDGOLD RES LTD          
 
A MASTER PLAN FOR OUR BULL MARKET CAMPAIGN IN THE HUI INDEX
The Charge of the Light Brigade

"The Carnage was great, from the 673 men who started the charge, 113 men were killed and many others wounded. The Light Brigade was made up of the 4th and 13th Light Dragoons, 8th and 11th Hussars and the 17th Lancers. A Spectating French Officer General Pierre Bosquet proclaimed" "It is magnificent but it is not war."

As investors in the year 2007, we are at war. It is a financial war that we not only want to survive but absolutely must survive. If we have learned from history we will know how to avoid horrendous blunders and useless sacrifice. If we are to avoid a massacre of our finances we must approach this financial war with a Master Plan for our bull market campaign in precious metals. The precious metal mining shares have in the past appreciated much more than the actual gold and silver bullion. For that reason this campaign is geared toward a participation in the HUI Index of Precious Metal shares.

The Bull Market in the HUI began on November 16, 2000 at 35.31.

MASTER PLAN FOR OUR BULL MARKET CAMPAIGN IN THE HUI INDEX

First and foremost recognize that this is an opportunity to create wealth in a relatively short period of time. The reason for this is that bull markets in the precious metals complex have proven that from beginning to end they consume much less time than an industrial share bull market. Precious metal bull markets in the past have lasted approximately 10 years. The worst thing we can do is waste the bulk of our ammunition fighting tiny skirmishes. This is better known as short term trading. The win some, lose some attitude is not the attitude that wins the war. A strategic plan that has proven to work is one that must be followed if not only the battles but the entire war is to be won.



For subscription information to the Ron Rosen Precious Metals Timing Letter including "The Master Plan for our Bull market Campaign in the HUI Index and the Delta turning points for gold and silver please click on the address posted below.

THE RON ROSEN PRECIOUS METALS TIMING LETTER

Stay well,

Ron Rosen

 

Disclaimer: The contents of this letter represent the opinions of Ronald L. Rosen. Nothing contained herein is intended as investment advice or recommendations for specific investment decisions, and you should not rely on it as such. Ronald L. Rosen is not a registered investment advisor Information and analysis above are derived from sources and using methods believed to be reliable, but Ronald L. Rosen cannot accept responsibility for any trading losses you may incur as a result of your reliance on this analysis and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities. Do your own due diligence regarding personal investment decisions.

The total world's holdings of gold could be transported by a single solitary oil tanker.

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