By E.B. Tucker, editor, Strategic Trader
I sat down for half a dozen media interviews this year where I called for $1,500 per ounce of gold in 2019.
In several cases, the hosts nagged me about my prediction, asking if I would stick with it. I did.
Last month, it hit my target.
What I’m telling you today and what I told those same media outlets last week is $1,500 is only the beginning for gold.
Because I expect gold to take out its previous high of $1,900.
In fact, as I told Kitco News last week, from there I see it hitting $2,200 – about a 50% rise from its current price of $1,508 per ounce.
The question reporters ask is, “When?”
“When” doesn’t matter to me. I’ll explain why.
All of the serious money I’ve made investing came through positioning for a big move and sitting tight. Trading is tough. In and out all the time can work over a short period. But the big gains come from sitting tight.
After hitting an all-time high in 2011, the price of gold fell 45% to a low of $1,052 in late 2015.
While the Obama administration and the Federal Reserve experimented with radical money policies, gold stayed stuck. Notice in the chart above it didn’t do much after hitting its 2015 low.
What’s bad for gold is unbearable for gold miners. They commit to projects assuming they’ll sell produced gold for $1,500. Then it falls to less than $1,100. That means the project is bankrupt before it pours the first gold ounce.
That period is over.
I can give you a list of anecdotal evidence as proof. Several large mining firms combined this year in order to survive. These were not bidding war takeovers. CEOs got over their egos and merged to avoid losing their companies entirely.
But we need more than strong anecdotes to risk money on the gold sector.
From our view, that’s why the chart of gold is so important. It’s how I determined $1,500 was an important target for gold this year. If it hit that target, which it did, I felt it was a green light to invest more aggressively for higher prices.
The gold chart below goes back to 2014. Notice that after gold hit its low in late 2015 (circled in red), each rally that followed registered a higher low. The pullbacks of 2016 and 2018 (also circled in red) each hit low points higher than the last. To us, this meant it was a matter of time before gold exploded higher.
Breaking $1,500 was the first test. Now, I expect it to correct, which is market speak for rest and get ready for the next leg higher.
That next move for gold will catch mainstream asset managers off guard. As I said above, I expect it to eventually take out its 2011 high. That’s why the current pullback in gold is the perfect time to position for what may come next.
Now’s the time to take advantage. You don’t want to be sitting on the sidelines during this gold bull market.
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