At this point I think it’s pretty clear the general stock market is now in the initial phase of a new bear market. It’s trying to generate a bear market rally over the last three weeks, but so far it’s been pretty weak. That doesn’t bode well once the cyclical and secular bear trend resumes.

The HUI mining index is now on the verge of breaking down out of the multi-month  megaphone topping pattern. Once it does that will confirm that the bear now has his teeth in the last holdout sector. The sector that led the bull market over the last 2 1/2 years and now the last sector to succumb to the deflationary forces.

As I have noted in the chart I do expect the miners will find at least temporary support at the 200 week moving average. That should correspond with gold putting in an intermediate degree bottom sometime in the next two or maybe three weeks. Presumably it will come with gold below $1535. My best guess is that gold will make an attempt to test the 75 week moving average at that intermediate bottom.

At that point gold should be severely oversold enough to generate a very powerful, snap back, A-wave rally. That should be followed by a multi-month consolidation as gold works off the huge gains of the last 2 1/2 years. This while the stock market continues down into its final four year cycle low.

I expect the miners will produce a substantial rally off the 200 week moving average also but I’m afraid they will continue to get dragged down by the general bear market in stocks even if gold does form a high-level consolidation over the next year.

So while I expect to see a great buying opportunity on miners in the next few weeks I doubt it will be a long-term type trade. That probably won’t occur until the stock market puts in its final four year cycle low sometime in the fall of next year.

First lets look at the technical aspect with the Barrons Gold Mining Index. Gold Stocks basically consolidated from about 1937 to 1961. The breakout really began in 1964. The consolidation ranged from about 17 to 50. The breakout took the market from 50 to about 220 and in only four years. Today we are on the cusp of a similar breakout. The market made a marginal high in 2008 and another marginal high earlier this year. A sustained move to new highs will qualify as a major multi-decade breakout.

This breakout will come at a time when the gold stocks are trading at a historical discount. The chart from Erste Group Research below shows the historical and estimated future price to earnings (PE) ratio for the companies in the HUI Gold Bugs Index. As of now, the gold stocks are trading at their lowest PE ratio in the past 11 years. That is ironic considering we are in the second decade of a bull market. In an interview with KingWorldNews, legendary mining executive Pierre Lassonde said the gold stocks, in terms of valuation are probably trading at a 10-20 year low. Obviously, there is plenty of room for valuation expansion.

Furthermore, the gold stocks are hardly a popular sector. The data from Rydex’ Precious Metals Fund (courtesy of SentimenTrader.com) shows that the sector is underowned in both nominal and real terms. Assets in the fund are just gaining from a two-year low and as a percentage of all sectors, assets are only 14% which is also near a major low.

Moreover, the size of the gold stocks relative to the market is almost akin to a needle in a haystack. The next chart is another great one from the Erste Group. The S&P 500 has a market cap of $10.3 Trillion. The market cap of the HUI, at $220 Billion is only 2% of that. It’s less than Microsoft and Exxon Mobil.

The gold stocks are ready for a massive, potentially historic breakout and it comes at a time when the sector is underowned, undervalued and a tiny fraction of the overall market. Put it all together and your conclusion should be obvious unless you’ve been conditioned (as sadly many have been) to only focus on conventional asset classes. Then we can’t help you. If you live in reality and are ready to ride this historic bull market, then we invite you to learn more about our service.

Good Luck!

Jordan Roy-Byrne, CMT
Jordan@TheDailyGold.com

The HUI Index
The AMEX Gold BUGS (Basket of Unhedged Gold Stocks) Index (HUI) is a modified equal dollar weighted index of 16 large-cap (80%) and medium-cap (19.5%) gold mining companies that do not hedge their gold beyond 1.5 years. The 3 largest companies make up 41% of the index by weight with the remaining 13 companies, at 4% – 5% each, making up the balance. Go here for current information.

The XAU Index
The Philadelphia Gold and Silver Sector Index (XAU) contain 16 large (83%) and medium (15%) capitalization weighted companies engaged in the mining of gold, silver and copper. The same 3 largest companies as in the HUI account for 51% of the index by weight. As such, the XAU has a large-cap bias. Go here for current information.

The SPTGD (XGD) Index
The S&P/TSX Global Gold Index (SPTGD) consists of 64 modified market capitalization-weighted companies (78% large-cap; 19% medium-cap) involved in precious metals (primarily gold) mining. The 3 largest cap companies dominate the index with 42% by weight. A proxy for the index is the XGD which trades in Canadian dollars on the Toronto Stock Exchange. As such, the XGD has a currency bias which is explained below. Go here and here for current information.

The GDM (GDX) Index
The NYSE Arca Gold Miners Index (GDM), as represented by the GDX etf (see here for details), is a modified market capitalization weighted index of 30 companies (72% large cap; 22% medium cap) involved primarily in the mining of gold and silver. The 3 largest cap companies again dominate the index (at 30% by index weight) but to a much lesser extent than in the HUI (41%), the XAU (51%) or the XGD (42%). As such, the GDM/GDX has a medium-cap bias. Go here for current information.

The CDNX Index
The S&P/TSX Venture Composition Index (CDNX) consists of 558 micro cap companies of which 44% are involved in the early stages of the exploring, developing and/or mining and 18% in oil and gas exploration. This is the only index that gives insight into the price trends of micro-cap companies almost exclusively (99.4%). The CDNX is valued in Canadian dollars and, as such, has a currency bias like the XGD. Go here for current information.

How Best to Apply the Various Gold:Gold Stock Ratios

The Gold/HUI, Gold/XAU and Gold/GDX Ratios
The Gold/HUI, Gold/XAU and Gold/GDX ratios divide the daily close of the price of gold by the daily close of the value of the particular index and, when charted over time, provide an excellent running representation of relative strength and weakness between the two variables. That being said there are significant differences between these indices, as follows:
a) the Gold/XAU ratio emphasizes what is happening primarily in relation to the large-cap producers;
b) the Gold/HUI ratio emphasizes what is happening in relation to the large/medium-cap producers;
c) the Gold/GDX ratio emphasizes what is happening primarily in relation to the medium-cap producers

The Gold/XGD and Gold/CDNX Ratios
The Gold/XGD and Gold/CDNX ratios, on the other hand, compare gold denominated in U.S. dollars with stocks denominated in Canadian dollars. This has the potential of skewing the results depending on the strength of the two currencies relative to each other and, as such, should not be used when evaluating the trends of their constituent stocks with that of gold bullion.
(To develop your own G/GS ratio chart go to www.stockcharts.com and type in $GOLD:$HUI, $GOLD:$XAU, etc. for the time frame you wish to examine.)

The CDNX/XGD Ratio
To identify developing macro trends between large/medium cap producers and micro/nano precious metal explorers (the juniors) the ratio to follow closely is that of the CDNX/XGD which, in addition to highlighting the two different ends of the spectrum, are both valued in Canadian dollars.
As mentioned above, the XGD index follows the performance of 64 large, medium and small-cap companies and the CDNX that of 558 micro-cap companies. Comparing the divergence of each index to the other is an ideal way to determine if a developing trend is equally affecting all mining shares in general, just the large/medium/small-cap sector or just the micro-cap venture capital sector.
The CDNX to XGD comparison works better than that of the CDNX to any one of the other mining sector indices in that both the CDNX and the XGD are traded on the Toronto Stock Exchange in Canadian dollars whereas the HUI, XAU and GDX indexes are denominated in U.S. dollars and, as such, are susceptible to the influence of exchange rate variances when comparing any one of them with the CDNX.
Gold sector analysts and commentators always assume that the large-cap dominated indices, either alone or in relation to gold, indicate the true current trend of the entire precious metals mining sector but that is simply not the case. In doing so they ignore the health and, as such, the price performance of the micro-cap gold and silver exploring/developing/mining companies which represents in excess of 80% of the total number of companies in the precious metals sector. A comparison of the CDNX with the XGD reveals a much more accurate picture of what is truly happening in the gold mining sector.

Conclusion
So there you have it. You now know the strengths and weaknesses of the more popular gold stock indexes, which ones to use when determining their relationship with gold bullion based on their market cap and how to compare the performance of the large/medium cap sector with the micro/nano-cap sector.
Never again put any credence in any analysis you read that has not made the distinctions discussed above. All gold stock indexes are not the same. Each has its own bias. Each tells its own – and different – story.

Lorimer Wilson is Editor-in-Chief of both www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) and www.munKNEE.com (It’s all about Money!). He can be reached at editor (at) munknee.com

www.FinancialArticleSummariesToday.com

May was the worst month for the S&P 500 since August 2010, but the percentage loss for the month only ended up being about 1.5%.  The four day rally at the end of May, including the big up day on Tuesday, served to soften some of the damage done in May.  But the market reversed all of that bounce in one day to start June with a massive selloff.

Poor economic statistics was one of the main reasons for the selloff on Wednesday.  The ADP Employment Report and the ISM Index both came in below expectations.   This was on the back of a poor Chicago PMI and Consumer Confidence numbers, and confirmation from the Case-Shiller Index that housing has officially reached double-dip status.

Source: Briefing.com

I noted in a previous article that the financial sector was extremely weak so far this year, and it has been a drag on the market as a whole.  The performance graph below shows that the financial sector is the only sector that is down so far this year.  The rotation into defensive sectors is also clear on this graph with Healthcare and Utilities leading the market.

Another potentially negative signal for the market is the Stage 2 breakout that is starting to form in the Consumer Staples sector vs. the Consumer Discretionary sector.  This ratio chart trended higher during the 2008-2009 bear market and when that concluded it began a long trend lower.  Over the past few weeks this ratio has broken back above the 30-week moving average on strong relative volume flowing into the Consumer Staples sector.

Not only are deteriorating economic indicators making news but the Euro crisis continues to rear its ugly head.  The European Union is attempting another bailout package for Greece but the market so far isn’t putting a lot of faith in it.  The Greek stock market is falling and credit default swap prices are surging.  The dollar is exhibiting a similar technical pattern to the start of the previous European debt crisis.

Gold has held up fairly well in recent weeks and is threatening to make a higher high.  This is in contrast to silver which is still stuck deeper in its trading range.  Gold actually broke out to new highs before silver in 2007 and 2009, but that didn’t occur until the fall of both years, and after gold attempted and failed to make a new high in the summer.  It should be interesting to see whether gold repeats that same pattern this year.

One factor working against gold is its relative outperformance against gold stocks, which is typically a negative sign.  The next two charts show that gold has broken out against gold stocks on a relative basis.  The ratio has also produced a bull flag recently which isn’t a good sign for the gold sector.

There also has been a lack of buying pressure in gold stocks since last fall, which has contributed to the unwillingness of gold stocks to outperform gold over the last few months.  A pickup in volume will probably be needed to break gold stocks out of this trading range.  Until then they could be vulnerable to further selling in the general stock market.

Source: Swing And A Miss To Start June

First we have the NYSE Gold Miners Index. This is broader than the HUI and GDX but generally follows the same pattern. The market brokeout in September 2010 and successfully retested the breakout in January and two weeks ago. The large cap miners have struggled but are now in an excellent position. Essentially there is no resistance after the peaks near 1800. We also want to note that on any historical gold stock index, the 2008 highs are essentially the same as the 1980 highs. Thus, the breakout in late 2010, if sustained is a historic breakout.

Our Junior Gold Index (25 companies equal weighted) has been the strongest. It broke past its 2007 high in late 2009. The market has a larger retest zone than the others. The market recently bottomed at a strong confluence of support. The bottom came at the 62% retracement of the 2010 advance, an area of lateral support as well as our 300-day moving average band. We expect the low to be retested later this summer but it should hold.

Meanwhile our Junior Silver Index (10 stocks equally weighted) has the clearest breakout/retest pattern. The market broke past 170 in late 2010 before reaching 240 in early 2010. The late January bottom occurred at 175. The recent bottom occurred at 210. These breakouts are from multi-year resistance so retests will generally last longer than a few months.

There you have it. Gold and Silver shares have acted according to a big picture plan we laid out at the start of the year. Major multi-year breakouts are always accompanied by a retest that can take months to play out. Nine or twelve months from now this retest will be a distant memory and likely a missed opportunity for most to accumulate shares in a bull market that could is on the cusp of a major move higher. If you are looking for more analysis and professional guidance as to how to profit in this bull market, then we invite you to learn about our premium service.

Good Luck!

Jordan Roy-Byrne, CMT
Jordan@TheDailyGold.com

Silver has been the clear winner as it broke out first while the large and junior silver shares would breakout later. Note how Gold has yet to breakout and how GDXJ and GDX have yet to test recent highs. We believe the lack of a breakout in Gold and the gold shares is a warning sign for Silver. Rather than a breakout that initiates an impulsive advance that lasts for months, this breakout in Silver could be potentially dangerous for those jumping in at these levels.

Take a look at the historical chart of Silver. The advance past $22 and $25/oz was obviously a major breakout. There is some supply at $35-$40. A break past $40 would lead to a blowoff top. Silver closed near $36 on Monday.

Though we are cautious in the short-term we note the very bullish cup pattern that dates back to 1980. Yet, the cup often includes a consolidation (the handle). Silver is overbought and will need time to digest the recent gains. Moreover, the inability of Gold and gold shares to breakout lends questions to the sustainability of recent gains in the Silver complex. The last time we had this bifurcation was in early 2004. Gold and Silver would consolidate for more than a year before breaking to new highs in late 2005. Are we saying that will happen again? Not necessarily.

This is a raging bull market that has many years to go. Yet, the veterans know that shakeouts can be brutal. What exactly do we see in the near-term and how are we playing it? Consider a free trial to our 14-day service.

Good Luck!

Jordan Roy-Byrne, CMT
Jordan@TheDailyGold.com
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First off let me explain gold’s 4 wave pattern (and no it has nothing to do with Elliot wave).

Gold moves in an ABCD wave pattern, driven not only by the fundamentals of the gold market (which I will get into in a minute) but also by the emotions of gold investors and the thin nature of the precious metals market.

The A-wave is an advancing wave that begins and is driven by the extremely oversold conditions created during a D-wave decline (more on that in a second). A-waves can often test the all time highs but rarely move above them. Usually they will retrace a good chunk of a D-wave decline.

The B-wave is a corrective wave spawned by the extreme overbought conditions reached at an A-wave top.

The C-wave is where the monster gains are made. They can last up to a year or more. The current C-wave is now almost two years old. They invariably end in a massive parabolic surge as investors and traders chase a huge momentum driven rally.

Of course as we all know parabolic rallies are not sustainable. So the final C-wave rally ends up toppling over into a severe D-wave correction as the parabola collapses. This is about the time we hear the conspiracy theorists start crying manipulation. In reality all that has happened is that smart money is taking profits into a move that they know can’t be sustained.

Then the entire process begins again.

Next, let me show you the fundamental driver of the secular gold bull. It’s probably no surprise to most of you that the Fed’s ongoing debasement of the dollar is one of the main drivers of this bull. But let me take this one step further and show you how the dollar’s three year cycle drives these major C-wave advances and how the move down into the dollar’s three year cycle low always drives a final parabolic C-wave rally.

Let’s begin with a long term chart of the dollar. I’ve marked the last 7 three year cycle lows with blue arrows. The average duration from trough to trough is about 3 years and 3 months. As you can see the dollar is now moving into the timing band for that major spike down in the next 2 to 3 months.

The extreme left translated nature (topped in less than 18 months) of the current cycle gives high odds that the final low when it arrives will move below the last three year cycle low. That means that sometime between now and the end of May we should see the dollar fall below the March `08 low of 70.70.

That crash down into the final three year cycle low will drive the final parabolic move up in gold’s ongoing C-wave advance. Every major leg down in the dollar has driven a major leg up in gold since the bull began. I really doubt this time will be any different.

I will be watching the dollar over the next couple of months for signs that the three year cycle low has been made. Because once the dollar bottoms and begins the explosive rally that always follows a major three year cycle low it will initiate the severe D-wave correction in the gold market. Gold investors will want to exit at the top of the C-wave if at all possible and avoid getting caught in the D-wave decline.

There is a developing pattern on the gold chart that once it reaches its target will be a strong warning for traders and investors to exit so they don’t get caught in the D-wave profit taking event as the parabola collapses.

This T1 pattern is a four part pattern with the first and second legs up being almost equal in magnitude, separated by a midpoint consolidation that allows the 200 day moving average to “catch up”. The current T1 has a target of roughly $1650ish once gold breaks out of the consolidation zone.

The fourth part of the pattern is the D-wave correction which should retrace to test the consolidation zone between $1300 and $1425. At that point the next A-wave will begin and we’ll repeat the whole process all over again.

Let me be clear though. I have no desire to buy gold. I doubt I will ever buy another ounce of gold again. The real money will be made in silver during this final C-wave advance and in the miners (I prefer silver miners).

During the last major moves higher in the gold market, miners, which are leveraged to the price of gold, stretched 35% to 45% above the 200 day moving average. At the latest peak the HUI was only 25% above the mean – a strong clue that this was not the final C-wave top.

I expect we will see the HUI stretch 40 to 60% above the 200 DMA at the final top later this spring. But like I said, I really have no desire to buy gold or the major gold miners. The real money is going to be made in silver and silver miners.

Silver has been exhibiting exceptional strength compared to gold for 7 months now. The consolidation on the silver chart is much larger than on the gold or gold miner charts. I expect that massive consolidation to drive silver up to test the old 1980 high of $50 by the time gold puts in its final C-wave top.

The time to get on board is before gold breaks out of the consolidation. Once it does the parabolic move should be underway and your chances of a significant pullback to enter the market will decrease significantly.

I’ve been helping investors time the gold and silver bull for several years now. If you are the kind of person that needs a coach to keep you focused on the big picture, someone to cut through the meaningless noise of all the myriad top callers and bubble proponents, someone to show you how these long and intermediate term cycles operate so you can actually make money from the gold bull, I have an invaluable offer for you.

For those of you that need a coach and want to learn how the gold bull works, I’m going to make available, this week, a special 15 month subscription. For the regular price of one year I will add three free months to your subscription which includes the daily and weekend reports. To take advantage of this offer, click here.

Choose a username and password and enter goldscents15 in the promotional code box, then click continue. You will be taken to a page with the 15 month offer.

Now is the time to act before the bull comes roaring out of the gates and the golden fireworks begin.

However if something has gone up long enough and far enough to garner the attention of the media it’s usually closer to a top than a bottom.

For instance, the oil service ETF is now stretched 33% above the 200 day moving average.

One has to wonder how much upside potential is left after a 5 month rally.

What I don’t hear anyone talking about anymore is gold or mining stocks (unless it’s to tell us that the bubble has popped).

While virtually every other sector has gotten extremely stretched above the mean the precious metal sector, the only sector in the world that is still in a secular bull market, has quietly moved down into an intermediate degree correction.

So when you hear the countless analysts spouting nonsense about the gold bubble bursting, or the fear trade coming off, or any number of ridiculous reasons they dream up for why gold has moved down, you will know the real reason for golds pullback is nothing more complicated than the average run of the mill profit taking event. An event that happens like clockwork about every 20-25 weeks on average.

These intermediate degree corrections are the single best buying opportunity one ever gets during a C-wave advance.

Also in the bullish column, sentiment in the sector has now reached bearish extremes. Even better is the fact that most of the sector has pulled back to long term support, and or tested a major breakout level.

The upside potential in many of the mining sector ETF’s and bell weather stocks is now huge, even if they were just to get back to the recent highs.

One has to ask themselves whether they think the profit potential is biggest in a sector where everyone is falling over themselves to buy. A sector that has already had a huge move and is incredibly stretched above the mean.

Or if the odds might be better buying a secular bull market that has experienced a nice pullback. A sector where a return just to the old highs would already constitute a huge gain, not to mention gold should still have one more parabolic move higher this spring as the final leg of this two year C-wave finally tops out.

My money is on the area where no one is looking.

Buffett said it best. “We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”

01/24/11 Baltimore, Maryland – Gold begins a new week up a touch from where it ended last week. The spot price as we write is $1,348. Silver is off a few pennies, to $27.45.

While the markets tread water, the Russians and Chinese are snapping up metal…

• Chinese silver imports quadrupled last year, according to figures from Mitsui. Net imports of less than 900,000 kilograms in 2009 surged to nearly 3.5 million in 2010. China, long a net exporter of silver, became a net importer in 2007.

• Russia’s central bank plans to keep loading up on gold. In 2010, Russia grew its gold reserves 23.9%, to 790 metric tons. Now the deputy head of the Central Bank of Russia has announced plans to add to that stash at a pace of 100 metric tons a year.

“It’s time to buy gold stocks,” declares Strategic Short Report editor Dan Amoss. “Top-down ‘macro’ analysis indicates that the bull market in gold stocks still has a long way to go. And bottom-up analysis tells me that gold stocks are cheap.

“I see the most likely macro scenario as follows: a steady rally in gold, a sideways stock market (some sectors up, some down) and falling Treasury bonds (rising yields) as more bond investors look ahead to a future of endless US budget deficits and decide to hit the Fed’s ‘QE2’ bid.

“The Fed’s balance sheet will probably double in size again over the next few years, filling up with even more Treasuries. The central banks in China, India and elsewhere are woefully short of gold – and stuffed to the brim with less-desirable US dollar assets – so they should continue to trade paper for gold and other real assets at a steady pace.

“More than an inflation hedge, gold is a hedge against chaos in the monetary system; people flee to gold when confidence in paper money crashes.”

Meanwhile, gold stocks remain cheap relative to gold, Dan says. Check out a chart of the HUI – a major gold stock index – divided by the price of gold. Leave aside the Panic of 2008 and gold stocks haven’t been as cheap by this measure since 2003:

“This fact is even more compelling,” Dan continues, “when you consider that the gold miners are far more profitable today. Profit margins are much higher.

“More importantly, these margins are likely to stay higher, since the cost of mining – diesel, steel, equipment, chemicals, labor, electricity, etc. – is not likely to rise at anywhere close to the rate at which gold bullion should rise. There is little chance we’ll see the same intensity of industrial activity worldwide over the next seven years as we saw over the past seven.”

Buying opportunities like this will be rare, Dan concludes, because many institutional investor portfolios remain underweight in gold. “These investors will keep looking to add exposure to gold because of the state of the private credit markets, government debts and central banks.”

Dave Gonigam
for The Daily Reckoning

Dave Gonigam

Treading a fine line between contrarian thinking and conspiracy theory, Dave Gonigam explores the nexus of finance, politics, and the media for Agora Financial’s 5 Minute Forecast. He joined kindred spirits at Agora Financial in 2007 after a 20-year career as an Emmy award-winning writer, producer, and manager in local TV newsrooms nationwide.

Special Report: Hyperinflation in the USA! If you think hyperinflation can’t happen here in the USA, you’re dead wrong. It’s already happened before! Now Obama is setting the stage for another inflationary holocaust by letting the Federal Reserve kick their money printing presses into overdrive – everyday living for average Americans could simply become too expensive! Imagine not being able to afford filling up your car, or even a single loaf of bread. This threat is very real… Click here to watch the presentation now

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By: Goldrunner

www.FinancialArticleSummariesToday.com

We appear to be at the 3rd wave juncture where the large cap producer gold and silver stocks and intermediate precious metals producer/developer stocks tend to start to move much better - and where the smaller explorer class starts to kick up its heels.

Let me show you what I mean with a few charts that will give you a clear visual of why “you ain’t seen nothing, yet” when it come to the future performance of the stocks (and warrants) of gold and silver mining and royalty companies. 
In the chart below we can see that the HUI (AMEX Gold BUGS (Basket of Unhedged Gold Stocks Index) of 16 large/mid-cap stocks (see here) is continuing to exhibit its fractal relationship compared to late 2005 and compared to the primary fractal in early 2002. The HUI has now broken out and appears to be completing a re-test of the top. It looks like the time for the mark-up phase in the larger cap PM stocks which make up the HUI is upon us. I have marked similar points in the HUI chart to show the similar characteristics to the 2005 period.
HUI target of 940-970 into May/ June 2011
The next chart of the HUI shows the similar price movements and indicators in the primary fractal of wave 3 of I (2002) versus the current 3 of Wave III movements. We can see that at this juncture in the Wave 1 fractal, price rose up to the angled line that extended off of the top of wave 1 of I. Thus, we expect the price rise into May/ June of 2011 to rise up to the angled line off of the top of Wave I. The similar rises in 2002 and 2005 were about 1.18 times (1.16 to 1.18) the height of the cup, added to the top of the cup. Thus, our potential target into May/ June of 2011 for the HUI lies up around 940 to 970. We’ll use the chart as a potential target zone and see how it plays out. Above the HUI chart I have plotted 3 large-cap PM stocks, Gold Fields (GFI), Yamana Gold (AUY) and Kinross Gold (TSE:K, NYSE:KGC), that have underperformed as of late. I’d expect these stocks to perform much better into May/ June of 2011.
Expect An Explosive Rise in HUI Constituent Gold Fields Ltd
Because few investors actually invest in a PM Stock Index it is necessary to track the progress of the individual stocks that we do invest in while tracking the charts of the HUI helps to give us a better feel of what the sector is doing as a whole. Below, is a chart of Gold Fields Ltd (GFI), a constituent of the HUI, showing the very large cup formation that has developed. We have shown how GFI acted in the 2002 period in a similar cup environment that matches up at one degree lower of Elliott Wave Fractal Degree. We can see in the chart plotted above the GFI chart that Gold in Rand is mired in a triangular correction. If we see a break-out of that triangle in Gold in Rand to the upside we would expect a rather explosive rise in the price of GFI. We have circled on the chart a very similar triangle break higher in Gold in Rand back in late 2001 that powered GFI into the huge 3rd wave rise in Wave I. Historically, South African Gold Stocks have had huge 3rd wave moves relative to the other waves.
Non-HUI Stocks NGD and NSU At Their Sweet Spots
While it looks like the juncture for the large cap stocks (of which the HUI is a proxy) run is close at hand the intermediate producers and soon to be producers are still the sweet spot of investing at this time. As such, we tend to favor stocks like Nevsun Resources (NSU) that should be producing soon and whose chart suggests a potential target of $16 to $18 on this run (from the current $6.50 or so) up to as high as $22, as well as New Gold Inc. (NGD) whose chart suggests a potential target of $22 (from the current $10 or so) up to a possible $28. If the HUI busts out as the charts suggest, we’d expect a higher sloped rise in the intermediate producers along with that HUI rise which in “GR terms” means that I expect NSU and NGD to bust vertically out of the trend channel they are currently rising through.
Explorers Stocks Starting to Run
The explorer stocks are starting to run, and we’d expect them to perform much better into mid 2011. Many of these charts have exhibited a “low chop” rise that is breaking out. The next target for many of these charts will be the “old highs.”
Per the LT fractal back to the 70′s, the PM stocks still might have 90% of their gains ahead of them before this PM Stock Bull is over. We have only reached the top of a mole hill on our trip up the mountain, it seems.
Gold Bullion Has Potential to Rise to $2,250 by mid-2011
A few months, ago, we had outlined a potential range for $Gold to rise into mid- 2011. We placed that range at $1,800 to $2,100 with a mean of around $1,950. There is angled line resistance around $1,875 in that time-frame that might serve as stiff resistance, however…
Conclusion
Gold has the potential to rise up to around $2,250 into mid- 2011 along with the HUI reaching 940-970.  
Please Note: Goldrunner will have a basic website (goldrunnerfractalanalysis.com) ready soon will include such things such as individual PM stock charts, new LT charting software, etc. if you wish to be contacted when the site is opened please send me an  email,  Also, don’t forget to sign up for the  munKNEE.com FREE weekly “Top 100 Stock Market, Asset Ratio & Economic Indicators in Review”.
DISCLAIMER: Please understand that the above is just the opinion of a small fish in a large sea and is not intended as investment advice. Information and analysis above are derived from sources and utilizing methods believed reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Comments within the text should not be construed as specific recommendations to buy or sell securities. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities. Do your own due diligence regarding personal investment decisions.