Is It Showtime for Gold?
Contributed Opinion

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Are You Prepared?

Is it showtime?

Is gold "finally" ready to blast above the $3440 resistance zone and surge straight to $3700-$4000?

Here's a look at the magnificent daily chart: 

In actual fact, gold has been in this range trade only since April. That's not a long-term, although for restless gold bugs, even a week can feel like an eternity as they wait for their well-deserved upside breakout prize!

The charts suggest a breakout is likely imminent. What about the fundamentals? Well, U.S. jobs growth has slowed, and yesterday's CPI inflation report was benign. That opens the door for rate cuts from the Fed.

Bank loans in China have also collapsed, and it's happened without much warning.

Here's a look at a chart from Bloomberg: 

Clearly, tailwinds for gold are beginning to blow from both the East and the West.

The miners have been on a tear, even with gold flat. So, one can only wonder about the incredible upside action that will almost certainly occur when the next big rally for gold begins!

Here's a look at a long-term rates chart with the key 40-year inflation/deflation cycle highlighted: 

The current inflation cycle only began in 2020, and it doesn't end until 2060. 

During the last inflation cycle (1940-1980), gold stocks rose thousands of percent. I'll dare to suggest that investors need to rethink their upside targets: 

Over the coming 35 years, GDX $5000 and CDNX 100,000 are inflation cycle numbers to consider. . .  especially if the cycle ends with the kind of speculative blowoff that took place in 1980.

Let's take a look at some of the hottest miners right now. Amex Exploration Inc. (AMX:TSX.V; AMXEF:OTCQX; MX0:FRA) just did an interesting $30 million deal with Eldorado Gold Corp. (ELD:TSX; EGO:NYSE). 

Here's the Amex chart: 

A massive bull wedge is in play, and the target zone of $3.40-$4.20 is likely to be acquired.

Benz Mining (BZ:TSX.V) is another hot junior that I've been highlighting for investors.

Here's a view of the weekly chart price action: 

Is Benz "too high to buy"?

Well, it's been "too high" for months, and yet it keeps going higher!

This is the nature of a long-term inflation cycle. It's similar to the long stock market bull runs from the 1870s to 1900, from 1932 to 1966, and from 1982 to 2025. . . 

Except that this cycle is about inflation, and as it proceeds, stocks are likely to move in the opposite direction (down) to the miners (up).

Here's a look at the monthly Benz chart: 

Clearly, Benz is still in a massive base pattern and is actually "too low"!

No investor is going to call all the twists and turns of a 40-year inflation cycle. Trying to successfully jump in and out of the junior gold stocks market in the infancy of that cycle is a difficult feat to achieve . . . especially if it's done with the bulk of an investor's capital. 

A big investing mantra in the junior mining sector is that if an investor buys lots of miners, a couple of them could become big winners. It's a lottery mindset. 

In contrast, I'll submit that now, and perhaps for the next 35 years, miners that don't perform incredibly well are going to be in the minority.

The time to be nervous about gold stocks is during a deflationary cycle, because most rallies are not sustained and are followed by brutal declines. It's the opposite in an inflation cycle like this one; the declines tend to end fast, and most gains are sustained!

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