The gold price extended its annual gain past 50% this week, marking its strongest performance since 1979 on the back of dovish monetary policy, rising geopolitical tensions, and a steady erosion of institutional trust around the world. Gold has crossed $4000 per ounce just 200 days after it passed $3000.
Following a significant 13-year cup & handle breakout in gold above long-term resistance at $2000 on March 2024, the safe-haven metal took just 18-months to reach its logarithmic technical target of $4000 earlier this week.
Political upheaval in three major economies to begin the week pushed the gold price higher, while spot silver moved $1 above its 45-year Maginot Line of resistance at $50 to hit an all-time intraday high on Thursday.
The continuing U.S. government shutdown, France’s governmental collapse, and the election of Sanae Takaichi as Japan’s first female prime minister took extreme overbought gold prices above the key $4000 level to reach $4080 mid-week, before some healthy profit-taking set in.
Both metals retreated following news that Israel and the Palestinian militant group Hamas signed an agreement on Thursday to cease fire, and free Israeli hostages in exchange for Palestinian prisoners.
Gold is one of the best-performing assets of 2025, outpacing advances in global equity markets and bitcoin, amid losses for the U.S. dollar and crude oil.
On the upside, the next major technical resistance in Gold Futures is at $4500. On the downside, there is good support at $3750 and stronger support at $3500.
Goldman Sachs raised its December 2026 gold price forecast on Monday by $600 to $4900 per ounce, citing strong Western exchange-traded fund (ETF) inflows and likely central bank buying. Here is a Reuters list of analysts' latest forecasts for 2025 and 2026 USD gold prices.
With the gold price rising continuously, this has further increased the upside potential for silver. The grey metal is up nearly 70% so far this year, benefiting from the same factors driving gold's rally, along with tightness in the spot market.
Although gold has already hit a record nominal high in inflation-adjusted terms earlier this year, silver’s CPI adjusted high is 4x higher at $200 per ounce as the Gold/Silver Ratio (GSR) has been moving closer to key support at 75.
The next major support in the GSR is at 75 to 1. Below there, 30 to 1 was the level reached at the peak of the 2011 bull market, and 15 to 1 was reached at the peak of the 1979-80 bull run.
After peaking at 107 in April, the GSR has been trending lower as silver catches up with gold, moving down to 80 this week. Silver prices have more than doubled in price over the past three years, boosted by mounting geopolitical risks including global trade disruptions caused by U.S. tariffs, and rising industrial requirements.
Although gold is due for a technical consolidation of recent outsized gains, the set up in silver remains explosive. The Q3 2025 quarterly close at the end of September above $46 in silver is a powerful technical breakout from a 45-year cup & handle pattern, signaling a significant shift in this tiny market.
The significance of this breakout in “poor man’s gold” should not be underestimated, as technical analysts and momentum traders have been eyeing the $50 resistance level for years.
But the speed with which silver blasted through this major resistance line this week, suggests a broader wave of forces is now colliding to send this tiny market soaring much higher.
A historic inversion has emerged in the silver market, signaling a severe physical shortage and potential short squeeze. During Comex trading on Thursday, spot silver rose to a high $51.19, while December Futures closed at $48.30.
This “backwardation,” where spot trades above futures, is rare and powerful. It reveals immediate demand for physical silver that vastly exceeds available supply, as futures traders struggle to deliver physical metal against paper contracts.
Historically, similar conditions have preceded parabolic price expansions. With liquidity and trust in paper markets having recently begun to deteriorate, the breakout in silver above 45-year resistance at $50 could push a runaway rally to $55-$60 in the short-term.
The loose liquidity conditions during fears of a sovereign debt crisis, Fed pivot risks, and dollar hedging, further support the bullish case for silver, as the metal faces its fifth consecutive year of a structural supply deficit.
With over 70% of silver production coming as a by-product of other metals like copper and zinc, even a price spike will not unlock new supply.
Therefore, silver remains in a powerful long-term setup, supported by the current backwardation, a technical breakout, and rising structural demand.
Meanwhile, mainstream media has only just begun to report the outstanding returns of precious metals equities, with a recent headline from Bloomberg, stating: “Gold Stocks Trounce AI-Led Chip Rally With 135% Gain in 2025”.
According to an article this week from Reuters, LSEG Lipper data shows gold mining funds surging about 114% year-to-date, far outpacing technology funds, which are up 27%.
With the herd only just beginning to pay attention to a major bull market in precious metals equities, it is no surprise this long-term extreme overbought sector is experiencing some healthy profit-taking after both gold and silver reached significant milestones this week.
Since the significant gold breakout above $2100 last year, prices have risen with only short periods of consolidation and very little profit-taking, as weakness is being bought quickly.
This shows that buyers are high conviction and longer-term holders of physical gold. High quality, such as central banks, means these buyers have a multi-generational perspective, unlike most momentum speculators who have a short, disinterested view of the underlying asset.
However, generalist investors have only recently began to join central banks by adding exposure to the safe-haven metal, while their overall allocation to gold remains below 2020 levels.
Following a period of tepid demand, monthly ETF inflows in September were the largest in three years, according to data compiled by the World Gold Council. Chinese buyers were also scooping up more gold-backed funds, with the four most popular registering inflows last month.
Moreover, for the first time in over half a century, major financial institutions are beginning to advocate allocating capital to the precious metals complex.
For decades, the dominant theme for portfolio construction was 60/40, meaning investors should allocate 60% of their portfolio to stocks and 40% to bonds.
Mike Wilson the CIO at Morgan Stanley recently encouraged a 60/20/20 allocation: 60% stocks, 20% bonds, and 20% precious metals. And even Bond King Jeff Gundlach is advocating a 25/25/25/25 portfolio: 25% stocks, 25% bonds, 25% precious metals and 25% cash.
With major financial institutions telling clients to buy gold for the first time in decades, and given how small the precious metals equity market is, the bull market in gold stocks could last much longer and go much higher than most investors think.
Even after more than doubling over the past 9-months, the combined market capitalization of every gold mining stock traded in the U.S. is only around $600 billion. Nvidia has had market cap corrections this size in a single day.
When considering the fact that financial institutions are only just beginning to recommend having exposure to precious metals, one begins to realize the potential upside.
Although the mining sector may have reached an interim top this week, the higher-risk/reward junior space still has plenty of catching up to do with lower-risk late-stage juniors, miners, and royalty/streamers as most are still trading below their 2020 highs.
Despite rising 75% YTD, the high-risk TSX-Venture junior index (CDNX) remains over 70% below its all-time high reached in 2007 when gold was trading near $1000, and 15% from its highs seen in 2020 when gold peaked at $2000.
When zooming out to look at the long-term setup in CDNX, the TSX-Venture has reached the neckline of an uber-bullish 10-year inverse head & shoulders accumulative basing pattern at 1000 this week with rising volume.
Once this level has been breached, the breakout target is over 150% higher at the 2011 high of 2465. When accumulating a basket of quality junior developer/explorers ahead of a probable significant breakout, one can have a life-changing experience as they gain doubles, triples, and even 10-baggers in a short time span.
The JMJ weekly newsletter is a one-stop shop for precious metals stock speculators. Along with providing detailed macro commentary and technical analysis for subscribers following the real-money JMJ junior portfolio, the letter also teaches its members risk management via successful buying and selling strategies.
After painstakingly accumulating positions in high quality juniors heading into 2025, the recent price action is why being right and sitting tight is the best course of action following a confirmed significant breakout in this tiny sector.
The real-money JMJ Portfolio is up over 170% thus far is 2025, massively outperforming both GDX and GDXJ. Trimming profits from large positions along the way, while holding core positions until the bull market matures, is recommended.
Considering the length of the previous bear market, and the severely depressed levels seen in CDNX over the past 18-years in the junior space, a major top in this tiny sector may not be seen for 2-3 years.
If you require assistance in accumulating the best in breed precious metals related juniors, and would like to receive my research, newsletter, portfolio, watch list, and trade alerts, please click here for instant access.
