On the heels of the price of gold surging $40 on Friday to $2,092, take a look at this…
Miners lag dramatically [but that will change]
March 3 (King World News) – Email from KWN reader Kevin W: When gold finally got through upper $1375+ range in June 2019, it breached a 4-5 year multiple top chart pattern much like today. At that time in June 2019, the XAU index was about 82.5. However comparing back to those 4-5 years where gold had failed to breach $1375 on the upside, the XAU index had been trading much higher at 105, 115, and 95 at each of those intermediate tops.
Finally by March 2020, the XAU index reached the 113-115 top it made during August 2016. However in March 2020, gold was trading at $1700 some 24% above its intermediate peak of August 2016. So in the space of 6 years mining shares were no better than their highest peak whereas gold was 23-24% beyond its trailing 6 year peak.
Miners re-assert themselves
Then after a gut wrenching swoon in miners during the March 2020 plandemic, gold and miners rally through August 2020. Gold reaches about $2080 and the XAU Index reached about 165. Gold was now trading about 23-24% above its March 2020 peak and XAU Index was trading about 44% above its March 2020 peak.
Today again the XAU Mining Index is 108.65 some 4% below its March 2020 peak whereas gold is trading at $2089 some 23-24% above its March 2020 peak…
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Here we are at March 1, 2024 with gold at $2089 and XAU index at 108.65. Let’s assume gold continues to break out of its 4 year multiple top and rallies 23-24% stopping at $2600 thereabouts. Where will the XAU Index go? Well based on the above pattern, it seems to imply the XAU Index would just reach its old intermediate high of the last 4 years at 175 before another short term 10-12% correction ensues washing and rinsing. To get to 175, the XAU would need to rally some 60% or 2.5x what gold does from where it is on March 1st, and that does seem reasonable.
The Golden Arc
Assuming gold rallies to the top arc of this excellent chart in 2024 that would be about $6000 or a gain of 187%. XAU Index at 500, a gain of 375%, seems reasonable as it is about twice the gain in percentage terms of gold.
King World News note: Historically bull markets end in a mania where stocks go parabolic, which would see sentiment completely reverse from what it is today. Meaning we will have moved from extreme fear to extreme greed. Kevin W. mentions what he refers to as a “reasonable” target for the XAU, but things will be anything but “reasonable” at that moment in time because mining stocks will be going parabolic. At that point all gold investors will be saying, “I knew all along this was going to happen.” That is certainly not the case today, but it’s what people will be saying when the mining stocks are in the final stages of a mania.
To listen to Alasdair Macleod discuss the huge trading on Friday that lifted the gold price close to the $2,100 level CLICK HERE OR ON THE IMAGE BELOW.
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