The Amex Gold BUGS Index is a basket of 14 major gold mining companies (Anglogold Ashanti, Barrick Gold, Goldcorp, Kinross Gold, Randgold, Harmony Gold,...). "BUGS" stands for "Basket of Unhedged Gold Stocks". The Index is designed to give investors significant exposure to near term movements in gold prices - by including companies that do not hedge their gold production beyond 1 1/2 years.
On the chart, you can see that gold stocks are trending up and are now nearing the support line. I will be closely watching several gold stocks in the next few days to potentially make some purchases for my portfolio. I will also be watching the price of the Market Vectors Gold Miners ETF (GDX) that tracks gold stocks.
What is interesting to note is that despite the uptrend in the US Dollar index that occurred since early December 2009, the Gold Bugs index has been remarkably resilient, which indicates that the market is still very bullish on gold. A reversal of the uptrend of the USD index would act as a trigger to boost the gold stocks to the upside.
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