The HUI - AMEX Gold BUGS Index is one of the most widely used indices in the gold industry. This instrument was created for the purpose of tracking and exposing the short term fluctuations in the price of gold. In other words, the index indicates which gold stocks are rising when the price of gold goes up. At times, gold stocks are rising faster than gold. In other periods, the price of gold is outpacing gold stocks.
The index was created in 1995. The composition of the index is reviewed on a quarterly basis in March, June, September, and December. The American Stock Exchange may remove certain companies from the index in order to reflect adequately the changes in the mining sector. A major aim of the index is to give a fair representation of the gold mining industry.
The HUI - AMEX is equal dollar weighted index. This means that each stock apply the same power in the general performance of the index. HUI- AMEX contains fifteen large and medium cap companies engaged in gold mining. The other major index, XAU, includes mining companies that hedge their gold positions in the long term. The HUI - Amex reflects the ratio between the daily close of the price of gold and the corresponding daily close of the price of the index. The computation of the companies` ranks is based on market capitalization. The index covers the mining stocks of companies such as Compania de Minas Buenaventura, Randgold Resources, Gold Fields, Harmony Gold Mining, Hecla Mining, and Kinross Gold, among others. Three of the mining giants, Goldcorp Incorporated, Barrick Gold, and Newmont Mining make up approximately 40 percent of the index. The remaining 12 companies make up between 3 and 6 percent. The index is listed on the American Stock Exchange (ASE) under the symbol HUI.