Over the past 2 months Gold rose from 1500 to 1900 oz, and over the past few weeks Gold price has traded in a range between 1750-1900.

The longer Gold trade this range then the more optimistic the play, as the 400 $ move was not a parabolic blow off Top that some are calling, but the initiation of an acceleration move.

The consolidation is likely to develop into a Bullish flag IMO.

Now, while the Gold price consolidates, Gold equities are taking the leadership role.

The large caps have broken out from a 10-month consolidation to a new all time high. The junior Gold miners are right behind the Big Guys.

In the chart below we show GDX (large-cap Golds), ZJG (junior Golds) and both against Gold's price.

As one can see, GDX has made a breakout while ZJG is set up to follow closely.

In the chart below we show GDX (large-cap Golds), ZJG (junior Golds) and both against Gold's price.

As one can see, GDX has made a breakout while ZJG is set up to follow closely.


Consolidation in ZJG will produce the handle on a Bullish Cup and Handle pattern. The breakout target is $31. Relative to Gold, both markets bottomed in August and are trending higher now. This is what many investors have been waiting for and questioning.

The Big Q: Why are the equities performing well now?

The Big A's: the S&P 500 has held up after finding good support at 1100. But, strength in the real price of Gold is more important. Charting Gold against Commodities provides a look at the real price of Gold which is a leading indicator for performance in the Gold equities.

As you can see, Gold relative to Commodities has reached its Y 2009 high. Gold is outperforming because not only is it rising, but other Commodities such as Crude Oil and Copper are not rising.

The Gold stocks are rising because they are in a sweet technical spot and strengthening fundamentals.

Gold and Silver have been rising yet input costs such as Crude Oil remain stable. This then explains why the large miners have begun to outperform.

It is a positive for the entire sector as it catches the attention of Big Money, thus giving the miners a Stronger currency for potential acquisitions. That, then is where the Juniors join the action.

There is light competition for the Gold equities too. The S&P 500 is in a range and being  traded by and for day traders now, with investors on the sidelines IMO.

Commodity equities and emerging market equities, while in structural Bull markets, figure to under perform for months until the next round of stimulus come into the economy.

For these reasons investors should seriously consider strong positions in Gold and Silver equities.

Here at www.livetradingnes.com we work to uncover the best and strongest performing precious metals equities as well as those Juniors with huge potential.

Check out the following 2 examples:

A Big Miner: Royal Gold Inc. (NASDAQ:RGLD)

http://www.livetradingnews.com/red-alert-royal-gold-inc-nasdaqrgld-53852.htm A Junior Miner: Arizona Gold and Onyx Mining Co (PK:VGCP)



Paul A. Ebeling, Jnr

Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster's Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.

Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.