Gold Price Forecast: Gold Miners Break Out… Gold to Follow

The gold miners have just broken out of a major five-year base. Significantly higher valuations lie in store over the next 6 – 18 months for most of the world’s gold miners. However, this move higher in the gold miners will not happen in a vacuum: gold itself will tag along for the ride, albeit in lesser percentage terms. For investors expecting a top in the gold market imminently – the charts suggest otherwise.

Gold Miners Break Out

First we turn to the GDX senior gold miners fund, from 2020 through present:

Note the major five-year resistance zone (black), which formed following the Coronavirus stimulus-induced peak from 2020. For five years, the senior gold miners consolidated in a wide range, continuously bumping up against the 40 – 46 resistance zone.

This resistance zone witnessed a breakout (red callout) just two weeks ago, following the Trump tariff-induced panic of early April. Note the decisive bullish weekly candlestick which formed in mid-April, clearing all resistance of the prior consolidation. That is as clear of a breakout as we could possibly ask for.

Target for the Gold Miners

In technical analysis, to estimate a target following a breakout, we may take a measurement of the widest part of the preceding consolidation, and add that amplitude onto the breakout point. This form of analysis works because, all things considered, we expect an equal amount of short-covering to occur after the breakout, once all short-sellers are underwater, as existed during the previous consolidation.

In the case of the GDX, the five-year consolidation had an amplitude of 24.25 points. Adding this amplitude onto the breakout point of 45.75 yields an official target of precisely 70.0 for the large-cap gold miners fund. From the current price just below 50.0, this equates to nearly a 40% gain expected for the average gold miner.

Note that while some miners may perform better than the average, and some may perform worse, as a general theme we expect the smaller junior and development-staged gold miners to show gains in excess of the 40% expected across the large-cap companies. This is because smaller companies are generally more sensitive to changes in the gold price backdrop and changes in market sentiment, compared to their larger siblings.

Gold in “Blue Sky” Territory

The senior gold miners are not going to rise in a vacuum – their advance will occur as gold itself continues to add onto recent gains.

Below we show the gold price from 2015 through present. Note that physical gold is in “blue sky” territory – this is a term which means that an asset class has broken all visible resistance on a chart. When this is the case, a market may continue to levitate much longer and much higher than many would otherwise expect.

A Gold Target?

For the case of physical gold itself, we do not have an official target in a similar manner to the 70 target that we have for the GDX senior gold miners. This is because gold has already achieved all of our outstanding targets, as discussed in this article: https://www.gold-eagle.com/article/gold-price-forecast-breakout-alert

However, we generally have our sights set on the $3,800 - $4,000 level per ounce for gold, within the coming year. Should this zone correspond with the GDX achieving its 70 target, we will evaluate the possibility of an intermediate-cycle top forming concurrent to these two achievements.

Takeaway on Gold and the Gold Miners

Gold itself is in “blue sky” territory with no known resistance on the chart. Meanwhile, the GDX senior gold miners have just broken out from a five-year consolidation, with a significantly-higher target still ahead. Investors would be wise to focus on making last-minute purchases of quality gold mining companies now, before the GDX achieves its higher target.

At www.iGoldAdvisor.com, we are focused identifying gold miners which we expect will see gains in excess of the 40% gain we expect for the GDX fund. We are also organizing private placements for our subscribers, which allow investors to gain access to FREE warrants in addition to their shares in mining companies, for greater upside potential. We also cover the latest expectations for physical gold, physical silver, the US stock market, and the US dollar for our members in premium weekly updates.

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