Hi Luke, cheers for the post.
This gold cycle is merely a continuation of the previous one, which was reset by a monthly mean reversion between 2011 and 2016. During the first cycle price broke out and retraced five times with an average expansion 45% above breakout, followed by a 21% pullback. In the current cycle, we’ve already seen one 52% expansion (2018-2020), followed by a near identical first cycle average pullback of 21% (2020-2022). The current expansion is already approximately 50% above the last breakout.We can further corroborate by using the RSI, which as shown in the lower panel is currently already above 80 for the 2nd time. Applying this principle it's statistically possible we're near done for now and due a pull back to around $2,400 but these are after all just averages so it could be one of these longer expansions which pushes upwards of 75% above breakout.
That's gold but the miners via GDX on the other hand still haven't had their catch up bid (lower chart). I don't trade gold I just buy it physically on the 20% pullbacks, but I've learned to take money off the table in my brokerage account with the miners.
Using this approach of percentages and probabilities helps eliminate confirmation bias, limits draw downs and provides cash to deploy later.
