The gold bulls have not had much to cheer about in recent weeks. After hitting a multi-year high, the market has eased back and seemingly entered a consolidation phase. The last several weeks have seen prices trade around the $1500 region, and although prices are currently below this support level, they have not seen a significant leg lower.
The lack of upside in recent weeks is actually a positive thing, not a negative. The next major breakout is brewing.
After reaching multi-year highs in recent months, the market had become arguably overheated, and a technically overbought condition developed.
Although markets can remain in an overbought state for a significant period of time, such conditions will typically lead to a significant retracement or even reversal.
Rather than pressing higher in an unsustainable overbought condition, the market has been consolidating and could be getting ready for the next major leg higher. A bullish flag pattern seems to be developing on the daily charts, and an upside breakout from such a pattern could be sharp and significant.
The recent dips seen in the market have all been bought, and there does not appear to be any lack of willing bargain hunters. With so much demand, especially on the dips, prices are not only unlikely to decline far from recent levels but could extend the rally seen in the last year.
Once the market does take off, there could be little standing in the way of a challenge of previous all-time highs near $2000 per ounce. The move could be rapid and leave many investors wanting to get into the market but unable to do so at lower prices.
The technical case for sharply higher gold is strong, but the fundamental case is even stronger.
The ongoing trade war, an accelerating global slowdown, a move away from the dollar and central bank easing may all keep gold on the offensive. As the economic and geopolitical environment continues to evolve, numerous challenges could pose a significant threat to stocks. The aging bull market could be at or near its conclusion, and a significant decline during the next bear market could be seen. With stock prices at current levels and valuations already arguably high, the gold market may also provide a much more favorable risk/reward outlook at current levels.
With prices just below the $1500 level, now may be the ideal time to build a significant allocation or add to existing holdings. Doing so has never been easier, and perhaps never more important.
Speak with an Advantage Gold account executive today about the potential benefits of gold ownership. Our associates are here to answer any questions you may have and can even show you how to build a significant allocation using an IRA account.
Don’t wait for the next major stock market collapse or for the gold market to take off without you. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started now.Tags: bargain hunters, breakout is brewing, geopolitical environment, global slowdown, price dips, trade prices, trade war