The story will focus on the March breakout of a 13-year cup and handle pattern as extremely significant and the major turning point for a new secular bull market in precious metals.

However, gold has yet to break through this threshold in real terms.

A breakout and strength in real terms is imperative for capital to flow beyond gold and the major gold producers.

This is actually a signal that more capital is flowing into the sector and when that happens, buying flows into silver stocks, junior mining companies and junior exploration companies.

As for gold in real terms, two important charts are near major breakout levels.

The first is gold relative to the total return of a 60/40 portfolio.

Gold has exploded through the cup and handle pattern and $2,100, but gold relative to the 60/40 portfolio continues to meander below the red line.

As you can see, in the early 1970s and 2000s, gold bottomed out and started to move up before launching against the 60/40 portfolio (in 1972 and 2002). We are waiting for this launch.

Next, we plot the inflation-adjusted price of gold (gold relative to CPI) and the Barron’s Gold Mining Index below.

Gold versus CPI is the best fundamental indicator for gold stocks.

Gold vs. CPI is about to break out of a 45-year base.

Gold has been trading between $2,300 and $2,400 for the past three months. As long as it stays at $2,290, it is well positioned to continue its rally into the fall.

If the next move higher is strong enough to push inflation-adjusted gold prices to new all-time highs and gold outperformed the 60/40 portfolio, that would be a much bigger development than breaking above $2,100.

This would confirm a new secular bull market in precious metals and trigger a buying frenzy.

It is important to note that I believe quality businesses are poised to generate huge returns in this environment. We will only move down the risk curve when a new secular bull market is confirmed.