Good Morning!

Gold against the stock market is one of the most important indicators for the entire precious metals sector.

Gold outperforming conventional stocks is essential for a secular bull market in precious metals as it signals an influx of mainstream capital into precious metals. 

This ratio is within 3% of testing 4-year resistance.

A breakout and sustained one, confirms a new secular bull market in precious metals and sets the stage for a significant leg higher.

Gold is approaching its measured upside targets of $3000 and $3050 while the miners are short-term overbought and testing their own significant resistance. A pullback would be normal and is expected.

At the suggestion of a viewer, I am taking a look at how the precious metals sector performed after Gold broke-out against the stock market. 

Gold vs. S&P 500 in 1970s

Click the image for full size.

The blue lines mark the start of breakout moves in the ratio or confirmation moves around a breakout (holding a retest of the 200-day moving average).

In late 1971, Gold began its breakout move against the 60/40 Portfolio. Gold against the S&P 500 began its breakout move in Q2 1972.

The sector continued higher for a few months before a correction that lasted 3.5 months. Silver, which was lagging, outperformed during the correction. Gold stocks exploded after the correction. 

After Gold/S&P 500 broke out, the economy did not begin a recession until 19 months later. (Something to keep in mind).

The late 1970s case is less instructive.

Gold confirmed its new uptrend against the S&P 500 in early 1977 but it was not until a year later when Silver and gold stocks began their acceleration.

Gold vs. S&P 500: 2000-2025

Click the image for full size.

The blue lines mark the start of the breakout moves in the ratio. The thicker blue lines are most instructive, in our opinion.

The ratio regained the 200-day moving average for good in early 2001, just before Gold completed its double bottom. The gold stocks bottomed a few months earlier while Silver did not bottom until later that year.

Gold, Silver and gold stocks had rebounded from a minor bear market (2004-2005) for a few months before the breakout move began. Everything moved higher and there was no interruption.

The breakouts in 2008 and 2020 were around market crashes.

In 2008, precious metals were already in a downtrend. The sector put in an epic bottom roughly one month after the ratio broke-out.

In 2020, precious metals bottomed three weeks after the first signs of a breakout in the ratio.   

New Sponsor Companies

Calibre Mining (CXB.to, CXBMF) is a well run junior producer that is about to reach mid-tier producer status as its Valentine Mine in Canada begins producing over the months ahead.

The company produced 242K oz Au in 2024 and should come close to producing 500K oz Au in 2026, with potential to reach 550K oz Au in 2027.

GoGold Resources (GGD.to, GLGDF) is currently a small Silver producer with a pipeline of two development projects. Its CEO Brad Langille owns a large position in the company and has a very strong track record.

The company is attractively priced and in position to produce 9M oz Silver-equivalent/year in a few years, with another development project that could take it to 16-17M oz Silver-equivalent. 

For more analysis of these company and many more companies, consider TheDailyGold Premium.

Gold vs. S&P 500 Conclusion

We reviewed the breakouts and major moves in this ratio during the 1970s and the last 25 years.

After narrowing it down, the choices for the best historical comparison are the early 1970s or the mid 2000s. I do not foresee a shock like Covid and we are not in 2008.

Both Precious Metals and the Stock Market have performed well and are in cyclical bull markets. Renewed optimism may push out the next recession. This fits with the early 1970s and 2005. But the early 1970s is the best comparison because it was a secular change for the ratio. 

In TheDailyGold Premium....

Here is the first paragraph from the summary of TDG #921:

In this update we note that four of our Top 10 companies are sporting significantly bullish multi-year bases (p6), add a company to our secondary watch list (p9), trim our largest position which is up almost 50% in the last two months (p2) and comment on the current technicals in the sector.

In TDG #920, we provided a complete update of our Top 10 Company Tables plus our #11 company.

This includes market cap, cash/debt, and 150-200 words on the company's value proposition and important future developments and potential. 

Sometime over the next month or two we will provide on update on the upside potential for each company. 

Thank you for reading.

I wish you all the best in 2025 and beyond.