Watching for a Gold Miner Breakout

In January of 2003 the XAU (gold and silver index) had a weekly peak close of $111.33, following which, it took a long slide down to the $70s. After several months of recovery it once again peaked for a weekly close of $109.68 in November 2004. It again slid back down to the $70 range. Now we are back up at this resistance level. At the end of August a peak weekly closing price of $112.92 was logged. This time the price did not slide back to the $70 range though. Yesterday the XAU closed at $114.29. This represents a breakout on the weekly charts IF the price does not reverse before Friday's bell. Gold and silver stocks we track have been consolidating and breaking out on heavy volume. Yesterday was the most dramatic action this sector has seen in some time. Gold and silver are not free and clear to run yet, but there is a very good chance that this week may be the week that the sector breaks out allowing stocks to finally run. Note: Cash silver made an 11-month high yesterday and did in fact break above its long term overhead resistance level. The stock market is still dealing with options expiration, so we don't expect to see much more action in the broader market until next week.