Here’s a chart of an index of stocks which recently rallied more than 65%. Can you guess which one it is?

For the answer keep reading…

Here is what I wrote, a few weeks ago, when I taunted the gold bugs, asking “Where is your golden idol now?”

Gold Bugs Index (HUI) has strong support at 175, which would mean the k-ratio to the low 0.20’s and once again, it could set up as a buying opportunity.

That turned out to be a pretty good call, all in all. To be honest though, I didn’t expect such a bombastic rally. Just that the relentless selling would be met with some meaningful support.

By the way, am I being too harsh on the gold bugs? you know, those who believe gold will go to a bajillion dollars and we’ll have to use it for legal tender in some post-apocalyptic “Mad Max” scenario. After all, if gold tops out and craters with the rest of commodities, in the face of one of the most ruthless bear markets and more importantly, in the face of perhaps the harshest global credit and financial crisis we’ve ever faced, when exactly will it rally?

Anyway, I’m sure that folks like Jim Sinclair will come up with some rationale and continue on with the same mindset. It is probably the fault of “manipulators” - just like the stock market is manipulated by the PPT (which by the way, is doing an amazingly atrocious job right now).

Interestingly enough, within the same time period physical gold rallied only 18%, going from a low of $700 per oz. to a high of $825. The previous counter rally in September was a respectable 40% but still a baby compared to this one. I guess my point is that gold and gold stocks are like everything else, supposed to be borrowed for a trade, not married for life. And a good gauge is the trusty k-ratio.

Here are the stocks that make up the Gold Bugs Index (HUI) which their individual weight:

• Barrick Gold ABX 16.76%
• Goldcorp Inc GG 16.10%
• Newmont Mining NEM 10.41%
• Harmony Gold Mining Adr HMY 6.78%
• Gold Fields Ltd Adr GFI 6.76%
• Kinross Gold KGC 6.43%
• Randgold Resources Ads GOLD 6.07%
• Eldorado Gold Corp EGO 5.52%
• Iamgoldcorp IAG 5.41%
• Comp de Minas Buenaventura Ads BVN 4.75%
• Yamana Gold AUY 4.01%
• Agnico Eagle Mines AEM 3.73%
• Hecla Mining HL 2.59%
• Golden Star Resources GSS 2.38%
• Coeur d’alene Mines CDE 2.31%