Grab Your Stake Before It’s Too Late
Earlier in the week, I said:
“Gold owners rejoice. Your patience is about to be handsomely rewarded.”
Now it’s Friday and the gold breakout is confirmed.
Yes, it took a little longer than expected, but the fundamental drivers for higher gold prices are solidly in place.
Before I get to my new gold price projections for the second half of the year I want to recap the drivers that set up this new breakout in the yellow metal.
Set up to Break Out
Recently the U.S. dollar notched new 52-week highs. Gold, as you know, has a strong inverse relationship with the buck. But I believe the dollar rally will be short-lived. As U.S. government debt and budget deficits continue to soar, the dollar’s strength will fall in favor of gold.
Another reason why gold is racing higher is the fact that the metal had already pulled back significantly from its 2011 high. Gold had already given back about one-third of its gain since the 2018 low. The retracement target was around $1,275 and gold is already trading back above $1,342 today.
But the last reason is probably the most telling. Let’s go to the chart.
Technically Speaking: Breakout Confirmed
Looking at the year-to-date chart for gold, we can see that a very important support was established at $1,270.
Additionally, gold’s posted highs were dropping lower and lower from mid-February through the end of May (blue line).
At the beginning of June we were looking at two possible scenarios. If gold broke down below $1,270, any hopes for a rally would be crushed.
The other scenario would be that $1,270 proved to be a bottom and, as we had predicted before, a surge was bound to occur.
Considering how powerfully gold has gapped up off its bottom, there’s strong reason to believe the rally is only getting started.
We said it Monday and we’ll say it again. If you don’t own a stake in gold, now’s the time to get some before prices rocket even higher.
Here’s to growing your wealth,
Chief Income Expert, Mike Burnick’s Wealth Watch