Gold Uptrend Intact, but Valuations Stretched as Base Metals and EMs Break Out

TopdownCharts
11-05

Gold — Long-Term Trend

Gold Valuation Indicator

  • While the trend is still strong and up, investor allocations still have room to rise, and monetary tailwinds are still significantly supportive, the composite gold valuation indicator is in extreme expensive territory. (source)

  • History tells us expensive markets can get more expensive, but it also warns that periods of correction and consolidation are on the horizon.

  • See also: Gold Valuation Indicators in Focus (indicator methodology)

Gold vs Silver vs Base Metals

  • I continue to think this is one of the most important charts in commodities and certainly at least for metals. The procession of price leadership from monetary metals like gold to monetary-industrial hybrid metals like silver, and then to industrial metals (e.g. copper, aluminum, zinc) is a force set in motion here.

  • There are several tailwinds building behind base metals, and a breakout is in progress.

Industrial Metals

  • One key element in the cyclical outlook for industrial metals is the “global growth reacceleration“ theme, which I outlined last week — basically it looks like global growth is set to heat up in 2026. (source)

  • With industrial metals very much sensitive to the ebb and flow in the global economic growth pulse, I believe this is going to be a key barometer market too (helpful in tracking that macro theme).

  • And so when you see industrial metals breaking out like this it says as much about the opportunity in metals as it does about the macro outlook.

Commodities (and Emerging Markets)

  • On a similar note, here’s a chart from my global cross-asset market monitor report — the key highlight being the emerging bull market in emerging market equities (notably in EM ex-Asia; which are generally more sensitive to commodity prices). (source)

  • And then set that alongside the bullish bottoming process on display in commodities (using the relatively diversified GSCI light energy index here), and it’s both confirmation of the previous chart and themes + further prompt to consider the bullish picture emerging in these still kind of out-of-fashion markets (everyone is focused on US big tech and missing what’s happening here).

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