The Best Buying Opportunity You’re Going to See for a While
Gold has had a strong 2019 performance, clocking a 21% gain from the start of the year to a peak of $1,550 per ounce in September.
However, the metal’s price has consolidated these past few months — dropping a bit and then leveling off. Still, gold’s on track for its biggest annual climb in nine years.
And 2020 could be even better.
In fact, now that they’ve taken a breather, gold prices are poised to resume their upward trajectory. And there’s a good chance they’ll climb roughly 15% higher by springtime.
John Roque and Rob Ginsberg, two technical analysts at Wolfe Research, looked into the recent price gyrations.
Indeed, there’s precedent for the “turn,” or bottom, we’ve seen develop over the past month. And the data is encouraging.
"Gold got very overbought into late August / early September, and since then it corrected its overbought reading," the Wolfe Research analysts note. "Prior turns, and there have been 7 of them, show gold rallying, on average, 15% over nearly 75 days with a median gain of 14% over 83 days.”
A rally of that magnitude would take gold prices to approximately $1,700 per ounce by the end of February.
Obviously, this is just based on historical precedent and it’s an average.
Nevertheless, it portends well, and there’s also a fair chance that the price surge will shoot past 15%.
“We continue to believe that gold will make a new all-time high in this cycle,” say Roque and Ginsberg.
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If that’s the case, then gold prices will ultimately surpass $1,900, or even $2,000 an ounce.
Roque and Ginsberg aren’t alone, either.
Another analyst, George Milling-Stanley, chief gold strategist at State Street Global Advisors, also anticipates a 15% spike in gold prices near-term.
The main catalysts for such a climb would be low savings yields, safe-haven buying, and a frothy stock market.
“Gold has seen considerable safe haven buying from investors concerned [over] low and negative yields in the bond market and fearing a possible downturn in equities,” says Milling-Stanley. “Ongoing uncertainties, both macroeconomic and geopolitical have provided support for both types of buying,”
Furthermore, as the gold price rises, it’s likely to garner more attention from speculators.
“I don’t believe the speculative community will want once again to risk missing the first 10 years of a bull market in gold, and the first $1,000 rise in the price, as it did at the beginning of this century,” said Milling-Stanley.
Indeed, speculation drove prices up by $500 in just nine months in 2011. A similar move remains a possibility next year — especially if the economy struggles.
That would be a boon to early investors.
And that’s why we recently released a report on how to profit from gold’s bull market.
The investing strategy we’ve adopted has proven to deliver gains even in bear markets. So a marked surge in gold prices would deliver enormous profits.
Jason Simpkins is Assistant Managing Editor of the Outsider Club and Investment Director of The Wealth Warrior, a financial advisory focused on security companies and defense contractors. For more on Jason, check out his editor's page.
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