Good Morning!

Today is election day in the United States and because of it, trading this week in precious metals markets is nothing other than noise.

I won't waste your time with a long diatribe about who is better for our Gold and Silver investments and why. 

Whoever wins will be bullish for Gold and Silver. That's my analysis.

I am far more concerned with the development of these two potentially massive breakouts.... 

Gold vs. 60/40 Portfolio 

Gold against the 60/40 portfolio (total return), is plotted in the chart below along with nominal Gold and Silver.

We are unable to see but Gold to 60/40 ratio closed October above the red resistance line and at a three-year high. This breakout is not confirmed and confirmation could require a few months. 

However, the larger point is the historical significance. After the ratios broke resistance in 1972 and 2002, it confirmed a new secular bull market in precious metals.

Inflation-Adjusted Gold Price

Second, is the inflation-adjusted Gold price, closing in on a breakout from a 45-year base. 

According to MacroTrends data, the inflation-adjusted Gold price closed October at its second highest monthly close ever. It was only $3/oz away from an all-time high. 

Using Gold against the current CPI shows the third highest monthly close ever and within ~2% of an all-time high.

The inflation-adjusted Gold price is important because it is an excellent indicator for the long-term performance of gold stocks. Gold against the CPI correlates closely with gold mining margins. 

Conclusion

Precious Metals are currently declining as they have enjoyed a strong run for many months. 

Silver tested monthly resistance at $35 and sold off while Gold reached $2800 but backed off. Days ago, the percentage of GDX and GDXJ stocks above the 20-day, 50-day and 200-day moving average was +95%.

The sector is cooling off and that is a good thing, as vertical moves lead to interim peaks.

Use this weakness to identify and focus on juniors with quality assets and value. 

You will want to position before Gold explodes higher against the 60/40 portfolio and breaks out of its 45-year base against inflation.  

In TheDailyGold Premium...

Here is part of the update summary of TDG #907:

The election and market action this week is mostly noise. Some

buying this year was because of election risk, so the passing of

such along with profit taking could trigger some selling. The very

short-term technicals are conducive to more selling.

Its possible the peaks from a few weeks ago could hold up for a

few months as the sector cools off. The other possibility is the

election passes, the sector puts in another low in a few weeks and

moves towards Gold $3000, Silver $38 and GDXJ $60-$61.

Either way, I am not trying to trade in and out. Gold and Silver could

really accelerate after the move in Gold/60-40 portfolio is

confirmed.

Another reason more correction is preferred now is because it would provide a last chance to buy high quality juniors before they become too expensive. 

I am scouring the junior universe to find future Top 10 Companies and other companies that are undervalued with 5x to 10x potential. 

Thank you for reading.

I wish you all the best in 2024 and beyond.