Overnight, gold futures moved lower on profit taking following a rally that pushed the June COMEX contract up 1.2% to $931.80 per ounce on the week. Silver, too, was taken lower as traders digested a contemporaneous 1.6% uptick, putting the May delivery at $18.305 Thursday.

Bullion's gains, however, were easily outdone by those of mining stocks this week. The 10-issue Philadelphia Gold/Silver Index (PHLX: XAU) was up 3.7% while the broader-based, but more gold-focused AMEX Gold Miners Index (AMEX: GDM) gained 3.4%.

And that takes us to our weekly read on the gold stock oscillator. The oscillator, you may recall, signals those times when it's more advantageous to hold gold mining stocks than bullion-based investments like gold futures, futures-based ETFs/ETNs or grantor trusts.

The oscillator signaled the go-ahead for a mining stock buy on March 25. A little early, that. Mining stock prices, reflected in the narrow XAU and the 34-issue GDM, pretty much vacillated until they found their legs over the past two trading sessions.

That's not unusual for a momentum indicator, though.

The last time the oscillator turned bullish on gold stocks was May 2005, which set up an eight-month run in which the mining index gained 74% versus bullion's 26% rise.

Will the current market offer a 3-to-1 advantage to gold stock buyers?

Hard to say, but there is a double-bottom in the XAU chart at the 172 level from late March/early April which set up an advance to the 192 level. The corresponding move in GDM is from a 1,281 bottom made on April 1 to yesterday's 1,405 close.

Stay tuned.

Gold Stock Oscillator