As a seasoned investment manager and financial market journalist, I have been analyzing trends since 2015. One key concept I have developed is that Gold must outperform the stock market to be considered in a secular bull market. In recent years, I have expanded this concept to include Bonds, with Gold needing to outperform the conventional 60/40 investment portfolio to signal a bull market.
While the 1960s saw an outlier with gold mining stocks outperforming, the most recent breakout of Gold in 2024 shows similarities to a historical comparison. However, Gold has yet to outperform the stock market as it did in the past, indicating the need for a bear market in stocks and a breakout against the 60/40 Portfolio.
Looking at the chart below, you can see the secular bear market in stocks, the 40-month moving average, and the confirmation signal from Gold against the 60/40 portfolio. Historically, Gold’s breakouts against the 60/40 portfolio coincide with precious metals diverging from bear markets in equities, signaling a potential upcoming shift.
Currently, Gold and Silver are in uptrends, but the sector lacks new capital influx, keeping valuations low and impacting leveraged plays. Once Gold starts to outperform the 60/40 portfolio and stock market, we can expect a surge in Gold, Silver, and other leveraged plays as fresh capital enters the sector.
For now, investors can consider positioning in quality junior companies to prepare for the anticipated market shift.
Analysis:
– Gold must outperform the stock market to signal a bull market
– Recent breakout in Gold mimics historical patterns
– Lack of new capital in the sector keeps valuations low
– Positioning in quality junior companies can lead to potential gains in the future