gold miners sector performance

On the weekend, I put up a special report on Sector Performance. I could have included XGD in that report - but decided to keep the report solely to the 10 S&P Sectors. XGD is a sub-sector of the Materials Sector.

Below is a 200 Week Chart of the XGD. The lower pane is a Mansfield Relative Strength Index comparing the performance of the XGD with the U.S.$ Spot Price of Gold.

The XGD topped in April, 2011 along with the wider Australian market. Since then it has been in a down trend channel and now seems to have found support at the very long term up trend line in place since early 2009.

The MRSI shows that for much of this period (early 2009 to mid-2010), the Gold Miners correlated reasonably well with the Price of Gold (POG) in U.S.$. The MRSI oscillates mildly around the zero line.

After a brief outperformance in mid-2010, the XGD began to underperform the POG. This divergence was a warning of the fall which was to come beginning in April 2011.

Since August, 2011, the MRSI has been stalling - with a slight upward bias. That may be a pre-cursor to an outperformance of the XGD. compared to the POG.

As the XGD chart is now back to the long-term up trend line from early 2009, there's a good chance that the Gold Miners might be setting up for a good rise. The chart needs to break out of that down trend channel to prove itself. A rise in the MRSI would provide additional support for such an idea.

A break below that very long term up trend line from early 2009 would be very bearish.

Redbacka