Good Morning!

Gold made its major breakout 13 months ago and now could be undergoing a correction. 

Today we look at the history of Gold corrections after major breakouts and within secular bull markets. 

Gold Retests 200-DMA After Major Breakouts

We have shown this before but it bears a repeat. 

Here is a weekly chart of Gold with 200-day moving average equivalent. The circles show that test of the moving average after the breakout. 

1972, 1976 & 2010 were after breakouts to new all-time highs. 

As far as magnitude of the breakout & point in the cycle, 1972 and 2006 are best comps. (Though 1972 is still best). 

The % declines in 2006 & 1973 were similar as both lost over 20% and fell below the 200-DMA briefly, before one last leg up to a cyclical top.

Gold Corrections in 1970s

Here is the 1970s weekly chart with the equivalent to the 100-day (blue) and 200-day moving averages (red). 

The early 1970s is a much better comp because late 1970s, Gold came out of a major bear market and was making its final run. 

In the late 1970s it held above its 200-day moving average the entire time but tested it multiple times. 

If we count the Gold price peaks in 1864, 1940s & 1968, then the breakout in 1972 was from an 100-year-long base. 

(As an aside, I've said the commodity price breakout in 1972 was the greatest breakout of all time, but the Gold price breakout is the same.) 

Gold shot up in 1972 and then corrected 13%, nearly touching its 200-day moving average before exploding higher again. Then in late 1973 it had a similar decline (price-wise) to 2006.

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. It nearly doubled before the current correction. 

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

Gold Breakout in Real Terms Like 1972 & 2002

If you look at Gold/S&P and Gold/60-40 Portfolio, you will see how they broke-out and confirmed the new secular bull at the very start of 2002 and 1972. 

That was 4.5 years before that 2006 peak. They just broke out last month. 

Furthermore, the assets invested in precious metals only began to rise in the past few months.

Gold Corrections During 2001-2011

Aside from briefly during extended corrections in 2004-2005 & 2006-2007 & during major drawdown in 2008, Gold essentially held above its 200-day moving average throughout. 

The 1970s are a much better comp for present than the 2000s as there was no Bond bull, like in the 2000s. 

Note, Gold's corrections were minimal in price until the huge breakout in 2005 & cyclical top in early 2008. 

Maybe after another leg much higher we get the 2006-style correction.

In TheDailyGold Premium....

In TDG #929 published Sunday we updated part of our Top10 Company Watch List Table and Secondary Watch List Table.

These tables include important company information including market cap, cash/debt and 150-200 words of notes.

In TDG #928 & TDG #929 we have fully updated:

Top10 Company Table

Top10 Watch List Table

Secondary Watch List Table

Our sector is correcting now, so this is a great time to learn about these companies. You don't have to worry about chasing them.

Before Wednesday April 2, we published a flash update calling for an imminent correction in Gold & gold stocks. We wrote:

There is rising risk of an imminent correction in Gold. We have

already seen this play out in Silver and the silver stocks. Gold is up

$70/oz over the last three trading days but the gold stocks are flat.

They did not confirm Gold’s push above $3050.

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Thank you for reading.

I wish you all the best in 2025 and beyond.