If we look back to 2001 we can see how choppy the gold stock bull market was at that time. This fits well into a diagonal pattern as it sure does not work with any impulse wave count. The odds are extremely high that the 2011 peak was a Cycle degree wave III position. Gold itself also topped out in 2011 which I think was also a Cycle degree wave III.
After 2011 gold started on a major decline which looks like an Impulse, but this all fell apart after the 2013 bottom. This works better as an Intermediate degree zigzag which ended in early 2016. Just the fact that the gold stock bear market can contain a zigzag, allows the entire bear market to retrace itself, and even break out and go much higher, than any 2011 peak.
If and when that happens then it becomes just another expanded flat, but in Primary degree. Our present bullish phase can work as a Primary degree "B" wave bull market, but we are just in the early stages of this move.
The HUI can touch any part of the top trend line, and how high it will go is a matter of how fast it's going to travel. We should end up with three big pushes to the upside much like any 5 wave bull market would. This is not a start of a wave 1 position as first waves are never the longest waves.
"A" waves do act like this and can be very tall. Time will tell if the present "C" wave bullish phase wanders off course and rolls over, before it hits any part of the top trend line.
The Gold/Hui ratio was at 5.75:1 and I believe we could see a 3:1 ratio before this bull market comes to an end, besides, we should read the reports about gold stock insider selling which has not happened yet. The ratios are a far more objective way of looking at gold stocks, which the seasoned contrarians use.
Short term we can see some downside, but this bull market is far from finished in the longer term.