This week we will talk about the Gold and Silver stocks. Along with oil, the metal commodities have also shown a strong increase in the last year. This has been good for the companies in the PHLX Gold & Silver Sector index since most of the companies in the index mine one of the metals, such as Newmont Mining Corp. (NEM).

The chat provided shows the PHLX Gold & Silver Sector Index (XAU) for the last year. The first thing you may notice is that the current price is well above both the 200-day line as well as the 21-day line. You can see the this index is in a very strong upward trend that doesn't appear to be stopping any time soon. The stochastic indicator at the bottom of the chart shows that the recent moves are firmly in the overbought territory, which in this case just shows that the trend is very strong and keeping the indicator line very high relative to recent movements.
(continued below)

PHLX Gold & Silver Sector Index (XAU)

Despite the strong gains recently, we still think that that this trend will continue for the next few months or weeks, at least. We would set a target at 180 and expect it to reach that before we could decide on anything longer term. There is some danger of a pull-back like in February or October, so if it fell back down to 160, we would stop out of it for a while until the upward trend continued.

If you're looking for specific things to invest it, you can buy iShare Dow Jones U.S. Basic Materials Sector Index Fund (IYM) or the iShares Goldman Sachs Natural Resources Index Fund (IGE). Both of these ETFs hold some of the same companies as the Gold & Silver Index. You can now also invest directly into ETFs that just hold the commodities. You can buy GLD, which tracks the price of the gold commodity, or for Silver you can buy SLV, the newest commodity ETF. In addition there are many mutual funds that also invest in gold and silver related stocks.

Price Headley is the founder and chief analyst of BigTrends.com.