A few months ago Gold completed, what in time, will be viewed as the biggest Gold breakout in 50 years.
It does not get any bigger or more significant than a breakout from a 13-year cup and handle pattern. The implications over the next few years and the next decade is incredibly bullish.
Most have turned their attention to Silver and rightfully so. When Gold breaks out and accelerates, Silver can really move.
But Silver is 70% from its major breakout point. That will take time.
The next big breakout in Gold will be in the Inflation Adjusted Gold price.
I was skeptical of its importance until recently.
The Inflation-Adjusted Gold price is important because it is an excellent indicator for the performance of gold miners. It correlates quite closely with the margins or profitability of the gold miners.
The Inflation-Adjusted Gold price closed May 2024 at a 12-year high and is fairly close to breaking out of a 45-year base. Note, that the historical trajectory and shape of the Inflation-Adjusted Gold price is similar to that of the Barron's Gold Mining Index.
The breakout in the Inflation-Adjusted Gold price would likely transpire amid a slowing economy or outright economic downturn rather than a reflationary environment.
Economic weakness that leads to rising unemployment and lower stock prices, forcing the Fed to ease is the best catalyst for Gold and the mining stocks. The Gold price in real terms and mining margins would explode higher.
Recent action indicates we are not so far off from that scenario.
Gold has broken out to a 3-year high against Oil and is very close to making the same breakout against an equal weighted basket of Commodities. If Gold continues to regain outperformance against Copper, it will be an economic warning.
Recent weakness in precious metals is a welcome opportunity.
It may prove to be one of your last chances to buy quality juniors at good values.
If the next leg up coincides with economic and stock market weakness, miners and juniors will launch higher due to huge gains in the real or inflation-adjusted Gold price.
It remains early in this new bull market but the bargains and values won't last.
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