We last wrote two months ago that Gold would undergo a correction that could set up an accelerated leg higher.

Gold has held up very well over the past few months, consolidating in a bullish manner.

The consolidation may need to continue for another month or two. The longer it consolidates, the better position Gold will be in to explode to $4000/oz and Silver to explode towards $50.

Gold is currently in the third major breakout in its history.

In 1972, Gold broke out from over a 100-year-long base in what I have described as the Greatest Breakout of All Time.

The second greatest breakout for Gold, specifically, was its breakout in March 2024 out of a 13-year cup and handle pattern.

Finally, in 2005, Gold broke out from a rough 24-year-long base, surpassing $500/oz. But this was not a breakout to new all-time highs, like the other two.

We compare the three breakout moves below on the scale of the breakout that began in March 2024. We also include an average of the 1972 and 2005 breakouts, as well as an average that weights the 1972 breakout by ⅓ and the 2005 breakout by ⅔.

The 1972 breakout move peaked in early 2027 at nearly $ 9,200/oz, while the 2005 breakout move peaked above $ 4,800/oz in late 2026.

The lower average reaches $5,300/oz 12 months from now and almost $5,700/oz 16 months from now.

So far, Gold is doing a good job of staying close to the averages.

Even if it follows the weakest of the five lines, it would reach $4800/oz in 16 months. The weaker of the two averages puts Gold at $5300 in only 12 months.

For Gold to reach those targets, it likely requires a 17%-20% correction along the way. 

Coming into this week, the percentage of miners and juniors (GDX, GDXJ, HUI) trading above the 20-day, 50-day, and 200-day moving averages was at least 95% across the board. Our junior silver basket of 10 stocks was up 82% in nine weeks. The sector was fully overbought.

A consolidation for another month or two in Gold and Silver would develop the fuel and buying power needed for the next advance.  

We are already positioned in the leading companies but are actively uncovering more companies that could lead the next move higher.

To learn the stocks we own and intend to buy with 5x to 10x potential, consider learning more about our premium service.

It has gained almost 60% since March 2024, when it broke out from its 13-year cup and handle pattern. It’s up 85% in the past 18 months.

This is a natural bull market, but bull markets correct and rest occasionally.

Let’s evaluate Gold at present as compared to history. 

The quarterly RSI reading is one way to determine how overbought Gold is in the big picture. More so than weekly or monthly RSI, it best determines how overbought Gold has been throughout its history.

The quarter just started, but if Gold were to close at this level, it would compare to similar RSI readings at peaks in 1973, 1979, 2006, late 2007, and 2009.

The late 2007 and 2009 readings occurred amidst breakouts later in the secular bull market. Gold was already naturally overbought as its secular bull market was well established.

The best comparisons to today are 1973, a few years after an extremely significant breakout, and 2006, one year after a breakout from a multi-decade base, although below the all-time high.  

Many analysts stop there. 

They don’t consider intermarket analysis, which helps explain the state of capital flows and provides insight into Gold’s status and performance in real terms.

Many believe Gold is expensive or has been in the bull market for a while.

In real terms, the bull market is just getting started.

We plot Gold against the 60/40 Portfolio (60% Stocks, 40% Bonds) and Gold against the S&P 500.

The previous secular bull markets in Gold and precious metals were confirmed when Gold broke out against the 60/40 Portfolio. It broke out of a base and exploded above the 40-month moving average.

That transpired in 1930, 1972, and 2002. Major secular peaks were years away.

Gold against the 60/40 Portfolio broke out of a 10-year-long base last month. This was powered by Gold’s breakout against the S&P 500. 

As reflected in the Gold to 60/40 Portfolio ratio, capital invested in traditional stocks and bonds has only begun to rotate into Gold and precious metals. It has a long way to go.

Topdown Charts provides strong evidence supporting that statement.

The charts below show the implied allocations (via ETFs) to Gold and Gold Miners. Allocations have only just begun to move off multi-decade lows.

Gold’s breakout against the conventional portfolio, coupled with low investor allocation, signals that it’s too soon to anticipate a major correction.

Gold does have a history of retesting its 200-day moving average after major breakouts.

The chart below highlights the six major breakouts in Gold and the weekly equivalent to the 200-day moving average, currently at $2700/oz.

It should reach $2900/oz in June and $3000/oz by the end of July. 

These big-picture charts help us understand where the market is and where it’s not.

It’s certainly not at a 1979-like or 2008-like peak.

Gold just broke out of a 13-year cup and handle pattern only a year ago. Furthermore, it broke out against the 60/40 Portfolio only a month ago.

Gold is in the early innings of a long and huge move. 

Of the potential similarities between 1973, 1979, 2006, late 2007, and 2009, the early 1970s are clearly the best fit.

As an aside, we did not mention the current secular bear market in Bonds, which is another similarity to the 1970s.

Furthermore, Silver began to outperform Gold after Gold corrected to its 200-day moving average after a breakout to a new all-time high.

The coming correction could be your last chance to buy high-quality junior gold and silver companies at a reasonable price.   

To learn the stocks we own and intend to buy with 5x to 10x potential, consider learning more about our premium service.

It has been a heck of a last year for precious metals. A year ago, Gold broke out from its 13-year cup and handle pattern, and days ago, it reached its measured upside target of $3,000/oz. Quality miners and quality junior mining companies have surged higher.

Silver has moved higher alongside Gold but has not outperformed Gold yet. It has gained roughly the same amount as Gold in the past 13 months. However, since the May 2024 peak, Silver is up only 4% while Gold is up nearly 25%.

Part of the issue is that Gold, after clearing $2100/oz, has been able to enjoy blue sky territory (no overhead resistance) while Silver has had to chew through multiple resistance levels between $26 and $35/oz.

Silver’s underperformance relative to Gold in recent quarters seems unusual, but a review of history shows that it’s too soon to expect Silver to outperform Gold.

We plot Silver, Gold, and Silver/Gold in the chart below.

Silver is a leveraged bet on Gold, so we focus on Gold’s price action.

The vertical lines mark the start of strong legs higher in Silver against Gold and Silver in nominal terms.

The blue arrows mark points at which Gold tested its 200-day moving average after a breakout.

There are six notable periods of Silver outperformance. Five of the six periods of outperformance began after a breakout in Gold was followed by a correction to its 200-day moving average. 

In 1978 and 2003, Silver’s outperformance began immediately after Gold’s retest of the 200-day moving average. In the other three cases (1973, 2010, and 2020), Silver’s outperformance began four months, two months, and two months after the first test of the 200-day moving average.  

The start of each period of outperformance coincided with a major breakout in the Silver price. 

Silver did outperform after it broke $28/oz in 2024, but only briefly.

History ultimately argues that Silver would be in a position to outperform Gold after the next sector correction, which entails Gold testing its 200-day moving average.

As for Silver in nominal terms, the significance of $50/oz is obvious.

In the meantime, mind the action around $35/oz, the stiffest resistance on the way to $50/oz. A monthly close above $35.52 would mark a 14-year high and exceed the monthly high from 1980. 

A quarterly close above $32 would mark the 3rd highest quarterly close in history. The quarter ends on Monday.  

Because Silver’s outperformance has not begun, investors have an opportunity.

We are already positioned in the leading junior silver companies but are actively prospecting for those companies that could be leaders in 2026. 

To learn the stocks we own and intend to buy with 5x to 10x potential, consider learning more about our premium service.

Nearly two weeks ago, we wrote that Gold and Gold Stocks were due for a pause. Naturally, that includes Silver.

The miners were very overbought and at resistance while Gold was approaching measured upside targets of $3000 and $3050 after a sharp move over the previous 12 months. Silver had only a tiny bit more upside before reaching very stiff resistance at $35. 

Friday’s decline confirms a correction has begun. 

History shows that some of the absolute best moves in Gold occurred after the market’s first correction after breaking to new all-time highs.

Gold has broken to a new all-time high and sustained it thrice. After each breakout, Gold tested its 200-day moving average (or came within 2% of it).

Here, we circle the correction and note Gold’s advance before the correction, followed by the decline in percentage terms. 

At the bottom of the chart, we circle the corresponding corrections in Silver. 

After Gold tested the 200-day moving average, the gains in both Gold and Silver were spectacular.

The minimum of the three gains for Gold was 80% in 18 months, and for Silver, it was 228% in 14 months.

That type of performance can repeat itself into 2026, but only if there is a fundamental shift.

Interestingly, the timing for a fundamental shift lines up perfectly with the two most important charts. 

Gold against the 60/40 Portfolio is working on a breakout from a decade-long base, while Gold against the stock market is close to breaking out of a 4-year-long base.

Breakouts in these charts would signal that capital is moving away from stocks and conventional assets in favor of Gold.

The setup is there for Gold and Silver to achieve spectacular gains if two things occur.

First, Gold needs to correct for a few months and successfully test and hold its 200-day moving average.

Second, and more importantly, an economic downturn must lead to a resumption of interest rate cuts, which would shift some capital away from conventional assets to Gold. 

That would be expressed through breakouts in Gold against the S&P 500 and Gold against the 60/40 Portfolio. The setup of those ratios signals they are ripe for a breakout. 

Senior gold stocks, mid-tier gold stocks, and junior gold stocks are also ripe for a breakout, after the next correction. 

We are already positioned in the leading companies but are actively uncovering more companies that could lead the next move higher.

Now is the time to pay attention. This correction will bring about an excellent buying opportunity.

To learn the stocks we own and intend to buy with 5x to 10x potential, consider learning more about our premium service.

Gold closed the week at $2900 after trading as high as $2968. It has measured upside targets of $3000 and $3050. 

It is overbought, which is a long-term positive, but can be a short-term negative.

Gold is a little extended from the average of the four best cyclical moves. It could move sideways for over four months and still maintain the average line.

The average reveals that the two points of acceleration are in July 2025 and January 2026.

The gold stocks have rallied up to important, multi-year resistance.

That includes seniors and large caps (GDX, XAU), mid-tiers (GDXJ), and juniors (GOEX).

A pause or correction is a reasonable outcome and does not do anything to change the larger technical setup, which is very bullish. 

Short-term breadth indicators for GDX and the HUI reached extreme overbought readings while medium to intermediate term breadth indicators remain at healthy levels. 

We plot GDX below and a number of breadth indicators.

On Thursday, 94% of HUI stocks (similar to GDX, excluding royalty companies) closed above the 20-day and 50-day moving averages, while 73% closed above the 200-day moving average.

The other breadth indicators (new 52-week Highs, Golden Cross, and Bullish Percentage Index) have more room to move before indicating the threat of a significant correction. 

On Thursday, 100% of the Top 33 stocks in GDXJ closed above the 20-day moving average, while 95% closed above the 50-day moving average. That is a short-term extreme.

The 20-day exponential moving average of new 52-week highs and the percentage of those Top 33 stocks above the 200-day moving average are not at extreme levels. 

The big picture remains very bullish for precious metals. 

Gold is following a bullish path, and gold stocks have the potential for a significant breakout. While breadth and sentiment are growing more bullish, they are not yet at the extreme levels that would cause a significant correction.

However, the risk of a pause or a short-term correction is rising. 

Gold is overbought, and gold stocks are testing multi-year resistance. As of Thursday, short-term breadth indicators were extremely overbought. 

Whether a correction materializes or sector momentum continues, it is best to focus on individual companies and identify the best values. It’s another way to sidestep corrections. 

We are already positioned in the leading companies but are actively uncovering more companies that could lead the next move higher.

To learn the stocks we own and intend to buy with 5x to 10x potential, consider learning more about our premium service.

Gold stocks have enjoyed a strong move while Gold has climbed to $2900/oz. The various ETFs and indices have gained 20% since the end of December. 

Gold is approaching measured upside targets of $3000/oz and $3050/oz, and the gold stocks are short-term overbought as they approach multi-year technical resistance.  

HUI and GDXJ data show that 87% of their stocks are above the 20-day moving average and 83% and 87% are above the 50-day moving average, respectively.

A pullback or pause could begin within a few weeks and perhaps last until the end of winter.

However, we cannot lose sight of the big picture. 

The setup for gold stocks is one of the best ever.

Let’s start with the fundamentals.

The real price of Gold has surged higher in recent quarters. Gold has gained 25% in the last seven months, and cost inflation has been minimal. Margins are expanding, unlike in 2020-2022. 

According to RBC and Bloomberg, miners are valued at around 8x cash flow. Based on my own research, miners have been valued anywhere from 6x to 25x cash flow since the 1970s. 

There is potential for higher valuations and for margins not only to expand but also to accelerate.

The inflation-adjusted Gold price is on the cusp of breaking out of a massive 45-year base.

Why is this important? It correlates very closely with the performance of gold stocks. 

Moving to technicals, we see one of the most bullish setups in years.

Various indices and ETFs (GDX, GOEX, XAU, GDXJ) show multi-year bases with incredibly bullish potential. 

XGD, the Canadian GDX, shows that when we remove the strong dollar, miners are testing a 14-year-long base. 

There is potential for explosive breakout moves over the coming months.

Although gold stocks have gained roughly 50% in the last 12 months, sentiment is hardly bullish.

Capital has chased strength in the stock market, the Mag 7, and crypto. 

Assets in all gold miner ETFs relative to all ETF assets in stocks are near a 20-year low! This is a staggering statistic for a sector that has increased 50% in the last 12 months.

The gold stocks are in prime position for potentially spectacular gains. 

Technicals, fundamentals, and sentiment are in perfect alignment.

However, they are overbought in a short-term sense, and Gold is approaching levels that could mark a temporary peak.

Focus on individual companies and identify the best values. It’s another way to sidestep corrections. 

We are already positioned in the leading companies but are actively uncovering more companies that could lead the next move higher.

To learn the stocks we own and intend to buy with 5x to 10x potential, consider learning more about our premium service.

Precious Metals closed last week and January strong, particularly Gold. The ancient metal of kings closed January up over 7% and Friday at a weekly all-time high of $2835/oz.

Silver, though far from an all-time high, closed the month up over 10% at $32.26/oz. Surpassing resistance at $32-$33/oz would take it to $35/oz. Strong support is at $29/oz.

Gold’s potential measured upside targets are $3000 and $3100/oz, while Silver’s targets are $35/oz to $37/oz.

If Gold begins to outperform the stock market, then this bull market has the potential to accelerate.

Let’s consider history and our proprietary analogs.

First is Gold’s performance after it breaks to a new all-time high. It has occurred sustainably four times.

Gold over the past year has traded and trended in line with the lower of the two averages. 

It may not be ready to accelerate, as this chart shows. However, the weakest of these lines shows the potential to reach almost $4000/oz in 12 months.

Next, we plot Silver’s performance after Gold makes a new all-time high. 

Silver is currently touching the average line and the 1972 line.

I doubt it is ready to explode, as the chart indicates. First, it would need to surpass $35 to $37/oz.

Nevertheless, the weakest line puts it at $40/oz in six months and $43/oz in nine months. 

The Gold bull analog chart plots the four strongest cyclical moves in Gold at the start of the current advance, which began in October 2023.

The average of the four moves reaches $5000/oz in 18 months, while the weaker moves reach $4600/oz and $4800/oz. 

If there is a recession and market downturn, this cyclical move can and should trend beyond the average. 

The Silver bull analog chart shows below the average, which breaks above $50/oz in 13 months.

Interestingly, all of the four cyclical advances accelerated after breaking $50/oz. 

The average reaches $38/oz in four months and peaks at $45/oz in 10 months. 

These aggressive Gold and Silver targets are only attainable if more capital rotates out of US equities and into Gold. 

Hence, it is very important to monitor the performance of precious metals against the stock market.

In any case, the window to accumulate high-quality gold and silver stocks with huge potential may close soon.

We are positioned in the leading companies but actively uncovering more companies that could lead the next move higher.

To learn the stocks we own and intend to buy with 5x to 10x potential, consider learning more about our premium service.

Gold’s breakout from a 13-year cup-and-handle pattern should have been more significant for the precious metals sector.

It was not because of continued strength in the stock market and the lack of strength in precious metals in real terms. 

The good news for 2025 is there are quite a few potential breakouts in real terms.

The first two potential breakouts are Gold against the 60/40 Portfolio and Gold against the CPI.

The bull markets in precious metals in the 1970s and 2000s were confirmed and unleashed when the Gold to 60/40 Portfolio ratio began its surge at the end of 1971 and 2001.

The inflation-adjusted Gold price (Gold against the CPI) is important because it is an excellent fundamental indicator for mining margins and gold stocks. It is on the cusp of breaking out from a 45-year base. 

Turning to Silver, we see two potential breakouts.

The first, which is very close, is Silver against foreign currencies (Silver/FC). This is Silver divided by the inverse of the US Dollar Index basket.

Gold/FC has been a leading indicator for Gold, meaning Silver/FC should be a leading indicator for Silver. Silver/FC is testing 2011 levels and, if it can push higher, could notch a 44-year high.

The second, which would happen last out of the five in this article, is Silver against the 60/40 Portfolio. That ratio has come out of a massive double pattern but needs to strengthen to test 10-year resistance. If and when Silver can break out against the 60/40 Portfolio, it would put Silver in a position to break above $50/oz. 

Finally, multiple gold stock ETFs and indices are in a position to break out this year.

GDX, XAU, and GOEX (an ETF similar to GDXJ) are trading in 4.5-year bases. XGD, the Canadian GDX, is trading in a 14-year base.

The gold stocks are in position for the most significant breakout since 2005. 

Gold made a spectacular breakout last year and has gained 40% in the last 11 months.

Leveraged plays like Silver, gold stocks, and small juniors have not outperformed because too much money is flowing into general equities, thereby mitigating Gold’s gains in real terms.

Gold’s pending breakouts against the 60/40 Portfolio and Inflation will signal better performance in real terms which will trigger more capital to move into the sector. A breakout in the gold stocks will follow, leading to outperformance from Silver.

In the meantime, one should position in quality junior gold and silver stocks that will lead the next move higher.

To learn the stocks we own and intend to buy with 5x to 10x potential, consider learning more about our premium service.

Gold’s big breakout was last year. 

It exploded through resistance at $2,100/oz, out of its super-bullish cup and handle pattern, and touched $2,800/oz.

The measured upside target remains $3,000/oz with a logarithmic target of $4,000/oz. The past cup and handle pattern breakouts I studied went from the measured upside target to the logarithmic target in six to 12 months.

But I digress.

2025 could be more significant because Gold and the precious metals sector is on the cusp of more meaningful breakouts in 2025.

First, is Gold and Silver against the total return of the 60/40 Portfolio. 

Note that these ratios appear different because I have corrected the 60/40 Portfolio calculation to include rebalancing every December. Without annual rebalancing, the 60/40 Portfolio can, for example, become a 65/35 or 57/43 Portfolio.

Due to the weakness in bonds, Gold is close to breaking out of a 10-year range against the 60/40 Portfolio. 

Silver remains contained within an 11-year base against the 60/40 Portfolio. It will not break out or come close until Gold breaks first.

Next is Gold against the S&P 500 (stock market), which has been locked in a range from 0.40 to 0.50 for nearly three years.

Gold cannot surge from its 10-year-long base against the 60/40 Portfolio without outperforming stocks. Surpassing 0.50 and sustaining it should set the stage for a major leg higher in the entire sector. 

Gold needs to break out against the 60/40 Portfolio. 

That means Gold needs to break out against the stock market, which means Gold needs to outperform the Mag 7.

The Mag 7 (Microsoft, Apple, Meta, Alphabet, Nvidia, Tesla, Amazon) gained an average of nearly 70% last year, driving the stock market higher. 

We plot Gold against an ETF that tracks the Mag 7. 

The ratio remains in a clear downtrend but bears watching. A rebound and stabilization near 60 could precede a Gold breakout against the S&P 500 and 60/40 Portfolio.

Lastly, various gold stock indices are consolidating within multi-year bases.

GDX, XAU, and GOEX (a fund of juniors similar to GDXJ) boast four-and-a-half-year bases.

There is potential for a breakout this year, which could unleash the best move to the upside since the recovery after the Covid crash. 

Gold’s big breakout last year underwhelmed because Gold did not outperform in real terms. However, it may be a prelude to more significant breakouts this year.

Gold has a chance to break out against the 60/40 Portfolio and also the stock market. Should those breakouts occur, a breakout in the mining indices would follow. Then, Silver would come to center stage. 

A stock market and economic downturn are the fundamental catalysts for these breakout moves, as they will lead to significant capital moving out of the Mag 7 and equities and into Gold. 

In the meantime, one can position in quality junior companies that will lead the next move higher. 

To learn the stocks we own and intend to buy with 5x to 10x potential, consider learning more about our premium service.

With the stock market still in a secular bull market, there is not enough capital or interest in precious metals outside of Gold.

Although the gold stocks have disappointed, they are in position for an explosive breakout in 2025.

By the time GDX and XAU rally back to recent highs, they will be working on 5-year bullish bases.

XGD, which is essentially the Canadian GDX, is sporting a gigantic, 14-year base.

The gold stocks are sporting very bullish bases at a time when they are extremely underowned.

The chart below plots the assets of gold miner ETFs relative to the assets of all stock ETFs.

The current market share of gold miner ETFs is very close to a 17-year low. It is down roughly 80% from the end of 2011 peak and even down over 50% from the August 2020 peak. 

For more capital to move into precious metals and spill over to the gold stocks, the economy must roll over into a recession, forcing the Fed to resume its easing. 

The market is currently only discounting one rate cut in the next 13 months.

The vertical lines in the chart mark the start of Fed rate cut cycles.

The steepening of the Yield Curve is needed for Gold to outperform the stock market and capital to shift away from conventional assets. 

The setup in the gold stocks is very bullish. They are trading within big bullish bases at a time when they are incredibly underowned. 

Once the macro picture aligns, and that entails an economic downturn with accelerated Fed easing, the gold stocks will explode out of their bases. 

It is best to position in the quality companies that will lead the move to a breakout. You can buy some of them 20% to 30% cheaper than just a few months ago. 

To learn the stocks we own and intend to buy with 5x to 10x potential, consider learning more about our premium service.