Gold bugs are impatient for a new break-out rally…but perhaps they should recognize that the break-out has already happened.

May 24, 2021

Dear Fellow Investor,

It’s time to get back to basics.

Gold investors like us often get caught up in “analysis paralysis.” In searching for themes for today’s market update, I’ve been analyzing gold’s recent behavior versus the Dollar Index, the 10-Year Treasury Yield, real yields and more.

And in truth, there’s plenty to discuss there:

• The Dollar Index has seemingly firmly secured an “80” handle and is now just above long-term support in the 88.25-89.00 range. (Our friend Ron Griess has some great charts on this in his weekly blog at TheChartStore.com.)

If/when it falls below this support (which could happen any day now), it could spark a major move lower in the Dollar Index…and a corresponding surge in gold.

• The 10-Year Treasury yield has been quietly falling over the past two weeks, and is doing so again today. This is very helpful for gold.

• With the stunning CPI surprise the week before last, real yields have taken a dive lower. This is very bullish for gold as well.

• And finally, the crypto crash (today’s rebound notwithstanding) has supplied another big boost for gold, reportedly prompting institutional investors to reallocate significant holdings from crypto into the yellow metal.

So in the background, there are plenty of positive developments for gold right now.

And with all of these factors working in their favor, there’s little wonder why gold bugs are so impatient for gold to get going.

Frankly, they (and I among them) just need to chill.

Because, as I surfed the web this morning, analyzing all of these factors and more, I kept coming back to the most compelling story of all…one capsulized in this simple chart:

This one-year chart of gold tells a very powerful tale.

First thing, notice that a year ago gold was hovering around $1,700. While it’s been quite a wild ride since then…and the August highs seem depressingly far above where we are now…we’re still nearly $200 higher than we were a year ago.

Second, and more importantly, we’re headed back toward those August levels.

Considering the parabolic rise of last summer, it took an exceptionally long and deep correction to digest those gains. The double bottom in March, marked on this chart, clearly shows the end to that correction.

And most importantly, the recent break through the down-trend line — as well as the break above the 200-day moving average which lies just over $1,850 — shows that the new rally is already well along.

Sure, the action of last summer was exciting. But looking back, it was obviously too exciting, and essentially unsustainable.

So those of us who are itching to see another red-hot rally in gold should perhaps recognize that gold has already broken out…and be satisfied with a slow-but-sure move this time around.

One benefit of a more leisurely rise in gold and silver is that the window to get positioned in highly-leveraged junior mining stocks is still wide open.

In that regard, I’ve got a couple of very exciting new stock picks being revealed in our June issue of Gold Newsletter, which is scheduled to be delivered this Thursday.

If you’re not already a subscriber and want to be one of the first to get these new recommendations, simply CLICK HERE to sign up now.

All the best,

Brien Lundin
Editor, Gold Newsletter
CEO, the New Orleans Investment Conference