Gold has been waiting in the wings while equities, commodities, and more speculative assets like crypto aggressively took off following the COVID-19 shakeout. Metals, on the other hand, saw very little growth. However, given the market conditions surrounding inflation and a hyper-inflated equities market, housing market, and commodities market, there is a LOT of capital on the table waiting to rotate. As the dollar surges in strength vs other major world currencies (see ticker $DXY for reference) bloated that saw incredibly large returns over 2019-2021 are now seeing bleeding declines. The strength of the dollar is enticing and I expect to see continued profit taking from equities, crypto, and commodities.
The real trick is understanding where the money will likely flow to once all the profit taking has concluded. One asset class that I believe will do very well over the next 5-10 years is metals -- specifically Gold.
Gold appears to be wrapping up a consolidation pattern known as a "cup and handle"
. The projected price target of a Cup and Handle is calculated by measuring the distance from the bottom of the cup to the top of the cup
. Take that measured distance and project it to the breakout level and you'll have your target:
. This target doesn't necessarily mean the trend would conclude there, but it would be an initial price target and likely be a point where the market will for some sort of consolidation structure.
When we look at the trend metrics like Bollinger Bands and Ichimoku Cloud analysis, gold displays all of the characteristics we would associate with the beginnings of a bullish continuation of the trend.
Bollinger Bands: If you're new to Bollinger Bands (bbands), you can think of them as a tool that measures and forecasts volatility of a market. The more constricted the bands are, the more the consolidated the market is, and the more spring-loaded the market is. If we have a highly consolidated market, we can think of this as a coiled, compressed spring that is ready to release all of the stored energy
. At the moment, Gold is showing a very very consolidated market and is trending very nicely above it's bbands midline:
. As an objective metric, markets that are trending above the bbands midline are said to be in a "bullish trend" and markets that are trending below the bbands midline are said to be in a "bearish trend". For Gold, it is decisively a bullish trend.
Ichimoku Cloud: Ichimoku Cloud can look very complicated, but when you know what you're looking at, it can actually be a very simple and useful tool to gage the strength or weakness of a trend. Without going terribly in-depth, my gold standard (pun intended) for a highly bullish trend is seeing:
1. The price is trending above both the fast and slow moving average
2. The price is trending above the cloud
3. The lagging moving average (the yellow squiggle) is above the price
4. The cloud is green
For my trend system, i add additional criteria using the 50 and 200 EMA (exponential moving average):
1. Price should be above both the 50/200 EMA
2. 50 EMA should be trending upwards above an upward trending 200 EMA
Long story short -- Ichimoku Cloud is showing a perfect bullish trend for the most part
TLDR: Gold is a slow moving ship and has fallen off of most peoples radar. I think the next 5 years will be a very very strong market and Gold will see upwards of 80-300% growth. Gold tends to be a hedge against economic uncertainty and all of the fundamentals for a massive flight to gold are here
The real trick is understanding where the money will likely flow to once all the profit taking has concluded. One asset class that I believe will do very well over the next 5-10 years is metals -- specifically Gold.
Gold appears to be wrapping up a consolidation pattern known as a "cup and handle"
When we look at the trend metrics like Bollinger Bands and Ichimoku Cloud analysis, gold displays all of the characteristics we would associate with the beginnings of a bullish continuation of the trend.
Bollinger Bands: If you're new to Bollinger Bands (bbands), you can think of them as a tool that measures and forecasts volatility of a market. The more constricted the bands are, the more the consolidated the market is, and the more spring-loaded the market is. If we have a highly consolidated market, we can think of this as a coiled, compressed spring that is ready to release all of the stored energy
Ichimoku Cloud: Ichimoku Cloud can look very complicated, but when you know what you're looking at, it can actually be a very simple and useful tool to gage the strength or weakness of a trend. Without going terribly in-depth, my gold standard (pun intended) for a highly bullish trend is seeing:
1. The price is trending above both the fast and slow moving average
2. The price is trending above the cloud
3. The lagging moving average (the yellow squiggle) is above the price
4. The cloud is green
For my trend system, i add additional criteria using the 50 and 200 EMA (exponential moving average):
1. Price should be above both the 50/200 EMA
2. 50 EMA should be trending upwards above an upward trending 200 EMA
Long story short -- Ichimoku Cloud is showing a perfect bullish trend for the most part
TLDR: Gold is a slow moving ship and has fallen off of most peoples radar. I think the next 5 years will be a very very strong market and Gold will see upwards of 80-300% growth. Gold tends to be a hedge against economic uncertainty and all of the fundamentals for a massive flight to gold are here