Where will the gold correction bring us?

Where will the gold correction bring us? ... and which signals are miners and stock markets giving?

A lot of ground to cover. Let us first comment on some graphs. The 6 months graphs of gold (spot), the HUI gold miners index and the HUI to Gold ratio.

Halloween came early in 2025. Gold had been hovering around 3400/Oz since May. The first close above $3500 goes even back to April 2025. Only by late August, the steady rise set in. You notice an overwhelmingly series of black candlesticks barely interrupted by single down days (red candlesticks). The rally accelerated towards its inevitable end, with a big down day on Friday Oct 17. This was 'rationalized' by pointing to option expiry. However this argument is valid for stocks and ETFs, not for gold futures. The market seemed to agree on Monday (Oct 21) with a manic rise to the all time high. 

Gold fell out of its parabolic rise on Tuesday Oct 22 with a plunge not seen since 2013. That plunge came however after a brief recovery in a gold bear market (autumn 2011 to december 2015).

 6 months graphs of gold (spot) USD on COMEX at close
(click to view at true image size)

Only two minor black candlesticks in a majority of red ones starting on Oct 22. The downward momentum is waning, with Gold hopping and plunging around the $4000/Oz pivot at the moment. Fibonacci adepts are trying to pinpoint where the gold correction might end. So far, the yellow metal is down about 10% or $400 from its top. Year-to-date there still is a 50% gain.

Over to miners with the HUI index

6 months graphs of the HUI miners index on NYSE at close
(click to view at true image size)

The HUI index peaked at over 690 on Oct 16. Upon the first down day of gold, the HUI index fell over 50 points or well over 7% on Oct 17. There was only a minor recovery on Monday when gold reached its all time high. Miners 'issued a warning' by underperforming gold in its last ascent. On Tuesday, 600 points wasn't even a resistance any more. The HUI spiked down below 560, but put down some more black candle recoveries intermitted by larger plunges. On Oct 31 the HUI closed at 580.85 down well over 16 % from its Oct 16 peak.

HUI to Gold ratio

6 months graphs of the HUI miners index to Gold ratio
(click to view at true image size)

As you notice from the HUI to Gold ratio, miners started strengthening from early August, when the Gold bull was yet to really start. The early August gold rise was merely a recovery from a downward fluctuation late July. The yellow metal lingered on for much of August before really rallying. As a result, HUI to Gold jumps up early August and continues its ascent to early October. We notice the ratio weakening during the first two weeks of October, indicating that miners have a hard time following gold in its uptrend. Predictably, a plunge follows in the second half of October, since miners lost more than did Gold.

It seems that the HUI/Gold ratio has been anticipating both the onset and the end of the gold rally. Remember a previous post: Miners once more started lagging before gold peaked (Dec 2024)

Now let us bring on the points of view of some analysts

Gary Wagner: Gold Correction Was Overdue, ‘I’m Personally Surprised’ It Took This Long. 

Gary Wagner is a technical analyst often interviewed on Kitco News (here with Jeremy Szafron). He combines technical analysis (mainly for timing) with fundamental views underpinning the long term trends.

Another excellent market and trend analyst is Gareth Soloway. I am adding a video of today Oct 31st here. 

He points to a dangerous overvaluation of the stock market, with few stocks leading to the recent all time highs. AI is paramount. NVIDEA topped a market cap of 5 Trillion dollars, while Apple topped $4 T. This values both companies at over 16% and over 12% of the US GDP respectively. Even during the DOTCOM bubble, the much coveted Cisco didn't even come close to that level. 

A stock market crash may take gold down to its summer 2025 base according to Soloway. Forced sale for meeting margin demands in an overleveraged financial market is what usually leads to the bottoming out of the gold market. The yellow metal is also the first to recover, before the economy pulls itself from the swamp which inevitably results from a severe market crash.