Gold: Long-Term Uptrend Remains Intact
For long term direction on the charts you should always zoom out and go back to relevant bottoms in order to assess what the charts are telling you.
Below is a monthly chart of Gold Futures dating back to 2007. This tells us not only the long-term uptrend is still intact, but we are in the second phase of the rally having tested converging trend lines around $1630/oz in November 2022.
The last period of sideways action took around five years before it broke out and the Covid rally began courtesy of the Fed and the money printers. The current sideways action actually sits above the trend line and has lasted over three years without any real direction.
Fundamentals drive price direction, and one should assume the next catalyst for higher prices could be a multitude of reactions to the Fed’s pivot on monetary tightening which has to come soon. The fall out could be a lengthy recession followed by tanking interest rates, QE to kick start the dropping economy, bank failures, CBDCs, a system collapse – the list goes on. However it would be remiss of anyone to not consider Gold in these circumstances as extremely bullish given the above would provide the conditions to run to a store of wealth.
Historically, money managers have advised their clients to have 10% of portfolios in Gold and Silver, (except Goldman Sachs (NYSE:GS) of course, who were found guilty of advising their clients then taking the other side of the trade) yet it appears ½ % of wealth is apportioned to the two precious metals. Just doubling this allocation would send prices much higher, and there is potential for allocation of so much more with supply already in high demand from central banks.
Whether it is later in 2023 or in 2024 there can be little who can doubt Gold prices are heading higher longer term. Yes, there will be short term influences such as data releases such an non farm payroll and inflation data that will lead to The Fed making decisions but ultimately the world economy cannot withstand rates at these levels for long. If you are stacking physical for long term wealth preservation then these little dips should be jumped upon. Anything sub the 1900 level now should be seen as a short term gift.
