Gold and gold shares
Gold prices have been in a reasonably orderly consolidation since breaking above $1200 in February and found support above that level late last week. This action continues to exhibit Type-2 bottom with right hand extension characteristics as taught as The Chart Seminar.
As discussed in previous posts gold shares now offer leverage to the gold price for the first time in a decade. Having been through an incredibly painful process of rationalisation they are no longer investing aggressively in additional supply which allows cash flow accrete to the balance sheet; increasing the potential for dividend growth. The NYSE Arca Gold Bugs Index broke out this week to new recovery highs and a clear downward dynamic would be required to check momentum beyond a brief pause.
Clicking through the constituents of the Gold BUGS section of the Chart Library the strong commonality throughout the sector is supportive of the medium-term recovery hypothesis.