Will Gold Stocks Continue to Rally?

BROAD STOCK MARKET SELL SIGNAL

SELL IN MAY AND GO AWAY?

NEW BUY SIGNAL GOLD AND PRECIOUS METAL STOCKS

Huge Up Move in Junior Gold Stocks Soon

Use CDNX as an indicator for junior gold stocks. Juniors are extremely undervalued--similar to late 2002.

FOLLOW THE MONEY

Investors continued to pour into precious metals in March, adding a hefty $1.2 billion into the mutual funds and exchange-traded funds that concentrate on the specialty sector.
That brought the total flow of cash into the subsector for the first quarter to $3.6 billion as investors sought safe-haven assets amid the ongoing credit crisis, which brought investment bank Bear Stearns(BSC - Cramer's Take - Stockpickr) to its knees, surviving only after a rescue by JPMorgan Chase(JPM - Cramer's Take - Stockpickr).

But funds that solely held the metal won out over those that owned shares of mining companies by a factor of more than 5 to 2, according to the most recent data from Boston-based company Financial Research Corporation.

Topping the list of winners, as it did every month last quarter, was the streetTracks Gold Shares(GLD - Cramer's Take - Stockpickr) ETF, which solely owns bars of gold bullion, taking in a net $590 million. The other two precious-metals bullion funds, iShares Silver Trust(SLV - Cramer's Take - Stockpickr) and iShares Comex Gold Trust(IAU - Cramer's Take - Stockpickr), added $140 million and $139 million respectively, bringing the total added to the bullion group to $869 million.

That compares with a monthly total of $336 million flowing into all the mutual funds that invest in the stocks of mining companies. The mutual fund taking in the most was the $2.2 billion Fidelity Select Gold(FSAGX - Cramer's Take - Stockpickr), adding $172 million, while investors pulled out $25 million from $1.9 billion Market Vectors Gold Miner(GDX - Cramer's Take - Stockpickr), the fund that lost the most during March.