The 'Real' Gold Price Gold Miners Follow
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The ‘Real’ Gold Price Gold Miners Follow

In a short-term and cyclical sense, gold miners and junior gold stocks follow the  price. However, beyond the short-term, gold miners follow the “real” price of Gold because it is a better indicator of long-term gold miner profitability than the nominal Gold price.

By the “real” price of Gold, we are talking about the Gold price in real terms. How is Gold performing against the CPI, CRB, or the stock market? The answer clarifies the outlook for Gold miners.

Gold stocks and junior gold stocks have underperformed the Gold price for over a decade (and over the past seven years) because the real price of Gold has not kept pace with the Gold price. Also, Gold was in a secular bear market from 2011 to 2022.

In a secular bull market, the Gold price rises consistently in nominal and real terms.

Gold has not risen too much in real terms since 2016, nor has it broken out to a new all-time high and held it. Not yet.

The best indicator for gold stocks over the long run is Gold against the CPI or the inflation-adjusted Gold price.

The chart below plots Gold, Gold against the CPI and Barron’s Gold Mining Index.

The gold stocks follow Gold/CPI far more closely than the Gold price.

However, when Gold is in a secular bull market, it also rises in real terms, which drives gold stocks much higher.

chart

Should Gold breakout and double in price over the next two to three years, then Gold against the CPI will blast higher to new all-time highs.

In that scenario, the gold stocks indexes will break to new all-time highs, and Barron’s Gold Mining Index would begin a move similar to the mid-1960s. See the blue arrows.

Now, before the Gold breakout, is the time to research and uncover the best opportunities while they remain cheap.

조던-로이-번-CMT23
조던-로이-번-CMT23
I’m Jordan Roy-Byrne, CMT, MFTA the editor and publisher of TheDailyGold.com and TheDailyGold Premium, our premium publication which emphasizes market timing and stock selection for precious metals investors. I’m a Chartered Market Technician and Master of Financial Technical Analysis. My Masters Thesis, which earned me the MFTA designation was published in the International Federation of Technical Analysis Journal. I earned a degree in General Studies from the University of Washington with a concentration in International Economic Development. In my spare time I enjoy weightlifting, following sports, National Parks, classic mob movies and traveling with my outdoors enthusiast wife. TheDailyGold I started TheDailyGold.com in 2009 although the genesis was in 2005 when I started a free newsletter covering commodities with an emphasis on Gold & Silver. We offer quite a bit of free content here and can help you whether you are a seasoned investor or this is your first time stumbling upon Gold and the junior mining world. First, go here to obtain a copy of our 2019 Book The Coming New Bull Market in Gold: Why Precious Metals Investments Will Flourish in the 2020s and 2030s. From there, we will also send you our weekly newsletter, which includes our latest content and thoughts on Gold and gold stocks. The book contains all of our best research on Gold and lays out what you can expect from the economy, capital markets and precious metals over the next 10 to 15 years. It is very important to me to educate people and help them profit immensely and avoid losing real wealth, which will deteriorate if you hold US-based assets over the next 10 to 15 years. Next, be sure to subscribe to our YouTube Channel as well as our podcasts: TheDailyGold Podcast and the new, 10-Bagger Podcast. Contact I can be reached at Jordan @ The Daily Gold . com (spaces removed to prevent spam). I try to answer every email but emails from subscribers are paramount. We currently are not interested in any advertising and we do not accept any guest posts or sponsored posts.
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