By Mike Paulenoff Many of our members have inquired about the merits of buying gold, the SPDR Gold Shares, vs. the gold miners, the Market Vectors Gold Miners ETF. One way to compare, contrast, and assess the differences is to View the comparative chart patterns Analyze the relative strength between spot gold and the gold miners, Analyze the relative performance of the gold miners vs. the larger S&P Index ET to arrive at a composite view of the gold sector There is a subtle but important qualitative difference between the daily chart of spot gold (the GLD) and the daily chart of the gold miners ETF (GDX). Let's notice that all of the action in spot gold since its June 28, 2013, multi-year low at $1180.04 has taken the form of a 14-month coil pattern (higher lows and lower highs). This contrasts with the GDX pattern, which looks to me like its coil pattern was invalidated in late June and has morphed into a more constructive base-like formation. For the time being, as long as any weakness in GDX is contained above the Aug. 5 low at 25.59, I would rather be long the miners than the metal. Looking at the GLD vs GDX ratio chart, it certainly appears like it has developed a one-year top formation, which means that the relative strength in gold (the metal) has peaked vs. the gold miners. Put another way, we can say that money increasingly is finding its way into the gold miners and out of gold (within the gold sectors). My sense from the chart is that the ratio line will head due south, suggesting strongly that the gold miners will continue to be the newly preferred vehicle to participate in gold in the weeks ahead — after years of underperformance. In addition to the GDX outperforming the GLD, my weekly ratio chart of the SPY vs. the GDX continues to argue strongly that the latter will outperform the former, meaning that GDX should continue to exhibit increasing relative strength against the SPY as well as against the GLD. Source: http://www.marketwatch.com/