Gold break out of 6 years downtrend. I have called a buy on Gold since my market outlook on 23 mar when gold prices was at 1315. Back then the call to overweight on gold was the bearish outlook for the US dollar, the impending recession due to the inverted yield curve and the expectation of the central bankers reverting to another monetary stimulus in the form of modern monetary theory if recession sets in.
I see 4 signs why the gold bull run is back. First, despite a strong dollar gold was quickly closing in on multi year highs. Second, and perhaps more important, gold mining stocks are outperforming Gold for the first time in many years. This is evident in the Gold ratio index. Because gold stocks provide leverage to the price of gold, they tend to move faster than gold if it is a real bull run. Thirdly Gold is also outperforming the other precious metal like silver and platinum. Fourthly. the world’s biggest central bankers are all preparing to flood the world with “easy money” again and add in the rising Middle East tension and your can expect a explosive move higher.
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