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Gold: Will the Next 13-Year Breakout Attempt Be Successful?

Published 11/16/2023, 11:27 PM

Since its peak in August 2020, Gold has moved towards a breakout on multiple occasions but failed in every case. 

Nevertheless, as of Thursday, November 16, Gold is within 4% of a daily all-time high and 2% of a weekly all-time high. It appears only weeks, if not months, from a historic breakout.

For months and months, I have explained the significance of the coming breakout in Gold.

Another interesting factor is that a gold breakout in 2024 would mark a breakout from a 13-year base, and the most significant historical breakouts have occurred from 13-year bases. 

Let me explain.

The three most significant breakouts in the stock market, occurring in 1950, 1982, and 2013, were from 13-year bases. Two breakouts were clean, while the stock market pulled away from the 1968 to 1982 bear market after 13 years. SPX-Monthly Chart

The Gold price was fixed until 1971, but there is Gold price data from the Paris Stock Exchange. See the chart below courtesy of @newlowobserver. 

Gold’s breakout move in Paris began in 1964, 13 years after the peak (and commodity peak in 1961). Note, the best proxy for Gold in the US, gold stocks made a multi-decade breakout in 1964. Gold Market at Paris Stock Exchange

We plot other markets and data series below.

Silver broke out from a 14-year consolidation in 1961, while the inflation rate made a 16-year high in 1968. The Hang Seng, one of the largest stock markets in the world, broke out from a 13-year base in the mid-1980s. BGMI-Weekly Chart

Note that this analysis is more subjective than objective. Gold does not have to break out in the next 12 months solely because of the history of 13-year breakouts. But Gold is within striking distance, and history shows how common these 13-year breakouts are. 

Gold is very close to triggering a new bull market just as sentiment towards the sector and mining companies is in the toilet. Meanwhile, fund redemptions and tax loss selling are driving these stocks lower even as a new bull market awaits.

That is creating some incredible buying opportunities.  

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