All-

XAU sitting at levels seen when gold was touching $535. Theories as to continuing weakness in these shares?

I think that traders are currently reevalutating the cost base of gold as per the dissapointing earnings from KGC and NEM. Kinross attributed this to two things 1. Higher energy costs, which is a no-brainer. 2. Was the unfavorable valuation of the USD to the currencies of the countries in which they are doing business.
Traders seem to be open to letting a little separation happen between the price of spot gold and the valuation of Gold Miners.

I really wonder if the dollar continues to fall relative to currencies of countries with mines if the Miners will continue to lag the spot.

as gold edges upward i still think buyers will be coming to the plate for metal stocks since not everyone buys the bullion... but if we have a bear market will it bring the metal stocks down with it? or have buyers rushing into the sector with momentum? any thoughts

bullring-

A look at the charts says that in declining markets the miners get pulled down too. I would not want to initiate new positions unless the miners start to strengthen vis a vis the bullion. The charts show they are steadily weakening and the bullion/miner ratio is dropping.

The following chart from stockchart.com shows the gold:xau ratio over the last 3 years.

http://stockcharts.com/def/servlet/SC.web?c=$GOLD:$XAU,uu[w,a]daolyyay[df][pb50!b200][vc60][iUk14!Lb14]&pref=G

It's clear that the latest action in gold vs. miners is nothing new and was due to occur eventually. The RSI 14 on the daily chart looks to be approaching the 70 level (overbought), but the weekly is around 50 and has room to move higher. This is a chart to review when you are looking to enter gold or miners.

Is it possible that funds are selling their gains in miners and other volatile stocks (see goog) and raising cash or buying bonds? Are black boxes selling the miners with 50 dma breakdowns? Does it make more sense to own the metal vs. the stocks if the overall market may breakdown?

g034-

Those new to the chart need to be aware that the zones at the top of the chart mean the miners (XAU) are CHEAP compared to the underlying metal and at the bottom relatively EXPENSIVE, so as not to confuse the oversold/overbought labels. The bars advancing again from the bottom back toward the middle mean the RATIO is correcting and the miners are becoming CHEAPER, but are nowhere near the bargain levels from the May 2005 lows which was a back up the truck time.

Larry Berman sent out a note to clients around a month ago suggesting the paired trade of going long the metal and shorting the miners. That has probably worked brilliantly.

I have been out of the miners for a while now and just holding GLD. When I see them strengthening I will buy in. That could be anywhere from now until May.

This is a good time to review monthly charts for $Gold, $XAU, and $WTIC for any messages there. I like to use the RSI(7) unless it goes against my bias, but then that's just me (or maybe not).

Be sure to use all the data going back to 1990.

MarkM - thanks for clarifying the $gold:$xau ratio for less sophisticated readers - so much to do, so little time.

All-

Miners still have no appetite to participate in the metal's rally. While we saw some price increases today, they were very muted and showed little strength. Should gold have a couple off days I would expect the ratio to drop even further based on action like this.

An okay day for The Tortoise Portfolio again.