NFTRH

From: Gary (NFTRH)
Date: Tue, May 15, 2012
Subject: NFTRH Update - HUI Monthly Chart, etc.

The big picture chart of HUI shows a situation that is becoming extreme (yes, we know Gary).

When the topping pattern neckline (by daily and weekly charts) failed at 475, the first target became the 38% retrace at around 450. When that failed, the target became the 50% just below 400. Here we are.

hui

This level, like the 62% retrace in the low 300's has significant visual support. I expect HUI to make a bottom at one of these levels, and it could be an important bottom due to the hysterically over sold condition of the lower panel indicators CCI, STO and Ultimate along with sentiment that is just epic bearish.

The more sensitive CCI and STO are below the levels they came to in the 2008 crash and yet (and I think this his important) the MACD is still ZERO+. In other words, in bull market territory. The commonly watched MACD and RSI could have people watching and waiting for lower levels similar to '08, but I have my doubts they will be realized.

Also note how in 2008 the standard (20,2) Bollinger Bands took a downside break. This has been accomplished with the current specimen as well. Notice how quickly HUI 'V' bottomed and snapped back to correct the downside excess in 2008.

I have never heroically called a top or a bottom in my life (at least that I can remember), because I find that kind of exercise does little more than make headlines. My philosophy has always been to buy 'all in and around' a bottom making process, adding or initiating things that have been on my shopping list in anticipation of them going on sale, like they are now. Of course, a 'V' bottom would increase the intensity of the process, and thus I slowly add now with no bottom yet confirmed.

I have actually been trying to rebalance the quality of holdings toward what I (and people I trust to discern such things) consider fundamentally sound, high quality miners, whether they be exploration stage or, more importantly (to me, given the NFTRH view on the real price of gold) young production stage. Items I have not even thought of selling are Argonaut, Rio Alto, San Gold, Timmins, Pretium, Almaden, Keegan, Eurasian and the ignominious Sabina. I added more Pretium yesterday and have been increasing others very slowly.

If we get a decline to the low 300's on HUI, I will get more aggressive. I will also become more aggressive if volumes start to show a capitulation is maturing. Meanwhile, very slowly and steadily do I tweak the portfolio, using this opportunity to position in the best stocks I know of. On that note, Otto is jumping up and down about B2 Gold, which he has firmly on watch. Thus so do I, along with classics RGLD, SLW and a bunch of Brent Cook suggestions (clipped from his most recent BNN interview, if you care to go take a listen).

Make no mistake, bottom feeding a crash that is likely now in the hands of the black boxes is sure to give the buyer a thousand little cuts (the speculative portfolio is now -6% for 2012) on the way to positioning for opportunity, but it is time to be paying attention if you are a gold stock player.

Regards,

Gary

For correspondence, please use gt @ biiwii.com as this will get mail to me sooner.

NFTRH, email updates and other communication are not to be considered as investment advice. Such advice should be sought from a licensed investment professional.

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