Finally THE Gold Breakout of Significance

The comments below are an edited and abridged synopsis of an article by Mark Mead Baillie

The gold breakout this past week was more than just a technical achievement; it was the price’s forceful follow-through.

Finally THE Gold Breakout of Significance | BullionBuzz
3d render image of golden bars with growing graph

Since then, gold’s rise to June 23 has been +35.4%; silver’s net change for the same time span is just +12.6%. Is it any wonder the present gold:silver ratio is 91.5x, the millennium-to-date average being only 64.4x, and by which the price of silver today ought to be +41.9% ($21.78) higher than it is?

There have been various gold breakouts since 2015, but nothing of any substance. Gold’s most common breakouts have been either above or below $1,280 to $1,240. But now, finally, we have one of significance.

By near-term measures, gold is currently stretched, which is a good thing as it returns to gaining substantive interest. Bear in mind that when gold is driven by geopolitical events, their subsequent short attention span in falling from the news radar generally puts price back to where it came from. Either way, there are two notable views.

First is Baillie’s 1-year graphic of gold vis-à-vis its BEGOS (bonds/euro/gold/oil/S&P 500) valuation line, derived from how day-to-day price changes in the primary BEGOS markets regress to those for gold itself. Per the oscillator (price less valuation) in the lower panel of the chart, gold reads as 123 points high (but it is $1,495 points low per the broader-based Gold Scoreboard’s dollar-debasement calculation of $2,898). Still, by this graphic, the current comparison of price with BEGOS valuation is at an historically high extreme.

Second is Baillie’s three months-to-date view of gold vis-à-vis its Market Magnet. The current distance from the magnet of nearly 43 points is extreme, as the price rarely veers from it for too significant a period of time.

The two near-term extremes point to still higher levels, the more immediate one being $1,434, after which we can reassess the year’s forecast of $1,524.

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