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Explaining The XUA and HUI Gold Index


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The gold index is a chart following the rise and fall of gold prices in dollars, yen, euros, etc. over a specified period of time and intervals. It is a line graph. You may add other lines e.g. the dollar in the same chart and see the correlation between the dollar and gold. Usually the gold line will go up as the dollar line will come down.

It is excellent for technicians to use this chart over decades to try to predict how gold will be priced in the future. Sometimes they are correct, sometimes they are not. A few decades ago the Hunt bothers tried to corner the silver market and they lost heavily. I am sure before they stumbled into this venture ,they charted out silver on a silver index graph.

Technicians study the lines very closely and predict a high or low for gold in the future. It is just a guide and sometimes an international incident will throw their predictions way off. Most everyone says that gold will trend higher for the foreseeable future. Guesses on the part of the experts range all the way up to $1500 a troy ounce (gold and silver use troy ounces). You have to do your own research and use your own gut feeling. Everyone has their own vested interest in making predictions; their livelihood might well hinge on how many clients they get to buy gold. Many gold sellers are very sincere and honest and these can be found with a little research. A hint: someone who is guaranteeing a specific price for gold is not the best of those in the industry.

As of now, there are two major gold indices that many rely on: The HUI and the XAU. The Philadelphia stock exchange is where you can get up to the minute updateso n the XUA gold index. The Amex HUI gold index quite often tends to be a very profitable index to follow when prices on gold are rising. However when they are falling, the losses are equally as large. The XUA gold index however does not hedge its gold positions more than 1.5 years into the future and is comprised completely of gold mining stocks as opposed to the many other gold commodity options.

Followers of the AMEX gold index (HUI) are often called Gold BUGS. BUGS is an acronym standing for “Basket of Unhedged Gold Stocks.” Each stock in the index is equally weighted and adjusted quarterly.

One of the many ways to invest in gold is by using the HUI index to find the current spot gold price and trading options, gold funds, or gold bullion itself based on its information.

No matter what gold index you use to make your investments, it should be studied along with charts of other commodities along with a chart of crises in foreign affairs. All these charts convey a meaning and paint an overall picture for the future of the commodity. An astute analyst will be correct more often than not in interpreting that meaning.

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