Gold's Rally Is Just Beginning By Chris Igou, analyst, True Wealth
Gold hit a critical level in late February... The "magic number" is $1,909. That was gold's closing price when it hit a new 52-week high on February 23. This is big news. Especially after last year... when gold managed to fail in spite of the perfect environment. Inflation ran wild. Uncertainty was high. Yet gold underperformed stocks by double digits last year. But that will likely change, thanks to the metal's recent breakout... Data going back 46 years points to even higher highs ahead. Gold could see another 12% gain in the coming year. And that means new all-time highs are likely in 2022. Let me explain...
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There's a simple way to make money in the markets. You don't have to understand economics, fundamentals, or much else really. Instead, you just have to stick with the trend. We write about this a lot in DailyWealth. When you study history, the trend is an obvious way to invest. It works better than almost anything. And it's not an emotional way to put your money to work, which is another positive. History shows that trends tend to persist... at least in the short term. And a breakout to new 52-week highs is a strong indication that the trend is in our favor. That's happening in gold right now. The metal hit a new 52-week high last month and went on to hit new highs afterwards. Take a look... Gold has pulled back from its peak in recent days. But history shows that we could still see a major rally over the next year, thanks to this extreme. Since 1974, similar setups have led to big outperformance over a simple buy-and-hold strategy... For four and a half decades, gold has typically returned 6%. That's not bad. But you can do better today... Buying after a breakout like this can lead to 5% gains in six months and a 12% gain over the next year. That's double the typical buy-and-hold return. You can see that owning gold today is a good idea based on history. And if we see a 12% gain, gold will hit a new all-time high. Lots of folks have given up on the metal after last year's poor performance. Again, gold managed to blow it in a perfect environment, with high inflation and low interest rates. It appears to be moving back to form now. While the metal has pulled back in recent days, the longer-term picture remains strong. Right now, gold is coming off a new 52-week high... And we could see more gains over the next year as a result. Good investing, Chris Igou Further Reading Gold stocks offer big upside potential... but they carry big risk. Right now, with gold surging, we could see a major rally in this sector. History shows that double-digit gains are possible in the coming months... Learn more here. "Throughout history, some folks have looked at gold as valueless and worthless," Dan Ferris says. But that mindset is deeply flawed. In fact, gold is one of the only assets that will always be a source of value... Read more here: This Is Why Gold Will Never Disappear as a Store of Value. |
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