Good Morning!

The new secular bull market in Gold and Silver is now confirmed!

The strong Gold breakout against the 60/40 Portfolio leaves little room for doubt and especially as Gold has broken out to a new 4-year high against the Stock Market.

We wrote about this in our book and have been writing about it constantly in recent years.

And as this has transpired, capital has begun to pour into the miners and the juniors.

Gold stocks are breaking out of multi-year bases and are extremely under-owned.

Capital will continue to pour into this sector and it could run red hot this year.....

Gold vs. 60/40 Portfolio & Stock Market

The first chart plots Gold, Gold against the 60/40 Portfolio (middle) and Gold against the Stock Market (bottom). The data is monthly.

Gold against the 60/40 Portfolio has broken out from a 10-year base and hit an 11-year high. 

Gold against the S&P 500 has broken out of a 4-year base to a new 4-year high. 

The breakouts are confirmed.

Below are weekly line charts using a 60/40 Fund (BIGPX), which is nearly identical to my 60/40 Data.

The weekly line chart shows textbook bullish action in Gold against the 60/40 Fund. Breakout, successful retest and then up, up, and away.

At the bottom we see that Silver against the 60/40 Fund has broken out to nearly a 4.5-year high. 

Gold Stocks are Breaking Out of 4 to 5 Year Bases

GDX and GOEX broke out of 4.5-year-long bases to reach 12 year highs. The XAU is very close. 

XGD, the Canadian GDX, has broken out of a 14-year-long base! 

GDXJ has broken out to a 4-year high. 

These are the types of bases that when broken, give way to very strong moves over the ensuing few years.

Precious Metals are Extremely Under-Owned

The charts below plot ETF assets in Gold & gold stocks against all ETF assets. Data is as of February close. 

These charts imply a secular low as far as ownership of precious metals.

Look at how much room there is to the upside. 

The chart below shows fund flows in GDX & GDXJ.

Left is annual fund flows and right is fund flows in last 12 months. 

Investors have been taking their money out of gold stocks over the past 12 months. 

Sponsor Companies

Calibre Mining (CXB.to, CXBMF) has now been acquired by or merged with Equinox Gold (EQX.to, EQX).

The two companies have a combined market cap of ~US $4.75 Billion, but have $1 Billion in debt.

Each company is building its most important and lowest cost mine right now. Both are in Canada, where the Gold price is extremely strong. 

The combined entity could generate EBITDA of $2.50 Billion at $2900 Gold in 2026. The combo could grow its production +60% from 2024 to 2026. 

In short, if these two mines have no major issues or significant delays and Gold continues to trend higher, the new Equinox should be a sector leader. But given the debt load, any hiccups that require significant future capital investment will hurt the stock. 

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.

The stock is acting very well. On December 22, 2024 we called a buy on the stock at C$1.10. We noted it was extremely oversold. The stock is up 66% since then. 

For more analysis of these companies and many more companies, subscribe to TheDailyGold Premium.

Gold Stocks Breaking Out Against Stock Market

On the heels of Gold against the 60/40 Portfolio breaking out of a 10-year base and Gold against the S&P 500 breaking out to a 4-year high, the miners are quietly gaining relative to the stock market. 

Generalists have bought Gold in recent years but as we have said, Gold needs to breakout against the 60/40 Portfolio & S&P 500 for more capital to flow into miners. 

Voila! 

The ratios are emerging from inverse head and shoulder bottom patterns. Moving averages are in alignment. GDXJ vs S&P 500 hit nearly 3-year high today while GDX vs. S&P 500 is close to 2-year high. 

These charts signal that more conventional, generalist and normie investors are slowly rotating to miners.

In TheDailyGold Premium....

In TDG #926 we added to our silver stocks table, published important sector charts and added to 2 of our positions. We also provided more comments than usual on the model portfolio page. 

One of those positions is in a company that might have a small wart but has huge potential if they execute. The stock is not overbought and if it can punch through nearby resistance it can start moving.

The other position is a "best of breed" type of company of which we simply did not own enough.

Here is part of our summary:

Here is the important conclusion and ensuing development. The breakout against the 60/40 signals confirmation of a secular bull market and the development is more capital flowing into precious metals, which means increasing amounts of capital flowing into miners, juniors, explorers and Silver. We can now weigh potential higher and quality a bit lower on the scale of value, quality and potential. A real bull market can mitigate and sometimes eliminate the warts that render a company good rather than great.

We will not worry about taking profits until breadth indicators blow out to the upside, the way they have at every intermediate peak in the last 20 years. (I have access to pre 2015 data but can’t share publicly). Given the nature of these breakouts, markets may reach major extremes before an intermediate peak.

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Thank you for reading.

I wish you all the best in 2025 and beyond.