Gold’s Breakout Signals Potential for Precious Metals Sector in 2025
The recent breakout in gold from a 13-year cup-and-handle pattern should have been a game-changer for the precious metals sector. However, it was overshadowed by the continued strength in the stock market and the lack of momentum in precious metals in real terms.
But fear not, as there is good news on the horizon for 2025. There are several potential breakouts looming in real terms that could shake up the market. The first two potential breakouts to watch out for are gold against the 60/40 Portfolio and gold against inflation-adjusted prices.
Historically, the bull markets in precious metals have been ignited when the gold to 60/40 Portfolio ratio surged in the 1970s and 2000s. The inflation-adjusted gold price is a crucial indicator for mining margins and gold stocks, and it is on the brink of breaking out from a 45-year base.
On the silver front, there are also two potential breakouts to keep an eye on. Silver against foreign currencies is testing 2011 levels and could reach a 44-year high if it continues to climb. Additionally, silver against the 60/40 Portfolio is showing promise but needs to strengthen to test 10-year resistance.
If silver can break out against the 60/40 Portfolio, it could pave the way for silver to surpass $50/oz. Furthermore, gold stock ETFs and indices like GDX, GDXJ, and XGD are trading in multi-year bases and are poised for significant breakouts this year.
While gold has already made a remarkable breakout and gained 40% in the past 11 months, leveraged plays like silver and gold stocks have not seen the same level of outperformance due to the influx of money into general equities. However, pending breakouts in gold against the 60/40 Portfolio and inflation could signal better performance in real terms, attracting more capital to the sector.
In conclusion, positioning in quality junior gold and silver stocks could lead to significant gains as the sector prepares for the next move higher. Keep a close eye on these potential breakouts as they could have a profound impact on your finances and investment portfolio.