Gold stocks strongly outperform after gold breakouts

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The gold stocks have underperformed Gold for almost 20 years so it is extremely difficult to imagine they could outperform Gold.

A second reason is that Gold and Silver have been in a secular bear market since 2011. The Gold price has remained essentially unchanged for over a decade, while the silver price remains well below its 2011 peak.However, gold stocks are in a much better position now that Gold has broken out of its 13-year cup and handle pattern and likely started a new secular bull market.GDXJ is constructed from the MVIS Junior Gold Miners Index, which has data from 2004.

Gold is only days past potentially its most significant breakout in 50 years. Should the breakout hold, we should expect gold stocks, especially junior gold stocks, to dramatically outperform Gold over the next year or two.

 

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