The gold rally is just beginning

The gold rally is just beginning

Is it too late?

That seems to be the most common question I get these days.

I am, of course, talking about gold.

The lump of metal almost no one thinks they need until the price rallies.

The gold price has recently traded above US$1,400.

To many people, it may seem like the opportunity to invest in gold has come and gone.

Especially when you convert that to Aussie dollars, and it’s almost two grand for an ounce of gold.

But here’s the thing.

The gold price rally is just getting started…

Shhh — there’s a top-secret project underway

Before I go any further, I should confess: I’ve been keeping secrets from you.

You see, in six weeks, I will be launching a brand-new service. I can’t give away too many details at this stage, but here’s what I can tell you.

This brand-new service we are launching is about all things precious metals — but with a twist. Instead of just providing recommendations, I will be interviewing industry specialists from around the world.

The sort of insider gurus who normally charge tens of thousands of dollars to speak at events.

Trust me, I’m hunting a big game here. I’ve already bagged four interviews. Plus, I have a list that’s 25 people deep and growing.

The point is, this new service isn’t just about finding a great stock idea and telling you about it. It’s about giving you access to knowledge that is out of reach for most investors. Big industry names you read about in the news…

In fact, I’m jumping on the phone with my next interviewee in two hours. My next guest has been working in the Australian gold market since the mid-90s.

And somehow, I have also managed to lock in a world-renowned investment adviser.

Sure, it means schlepping into the office at 5:30am this Wednesday. But given his experience and depth of market knowledge, it will be well worth my efforts.

Not long now until I can reveal all…

Gold cracks US$1,400

Gold’s mid-year smash through US$1,400 has many in the markets buzzing with excitement.

Although, over the past couple of weeks, I’ve encountered maybe a little too much excitement.

You see, it’s great that gold has pushed through this price level. And I’ve seen a few people calling out for the ‘next price points’.

You’d think I’d be doing the same, right?

Believe it or not, a dip in the gold price makes it more sustainable, from a technical perspective. The big picture for gold is intact.

However, the volatile price movements mean it’s still exposed for the time being.

Two weeks ago, I outlined what I thought was ahead for the physical price of gold, writing:

I reckon the yellow metal is going to take a stab at US$1,415-$1,430. That’s a good level. It’s an attempt to reach a price not seen since September 2013.

After that, get ready for a selloff…down to the US$1,360-$1,370 mark.

Now, I could make the case that I was near enough sort of right.

After all, gold did fall, then rally.

My blue arrows on the chart below show you what I was predicting…

US dollar gold price – daily chart


The actual outcome was that the gold price didn’t fall as far as I expected…

…and instead rallied much harder than I anticipated.

My problem isn’t that I got the price points wrong by 10 bucks either side.

The issue is that the closest thing gold has to technical support around this level is six years old.

Meaning, there’s nothing but air between US$1,350 and US$1,400.

Selling off into the US$1,380s is a good start.

The short fall to US$1,390 at the end of last week is also a good thing.

To ‘confirm’ that the US$1,400 price point is sustainable, we really need to see the gold price bounce off this.

Should this play out, it will go a long way to creating new price supports around this price.

With the yellow metal dipping back into the US$1,380-90s, this temporarily creates a new level of support, which, in turn, will make this gold rally much more sustainable, too.

Remember, a small dip down is far better than a long, straight line up…

…which is generally followed by a long, straight line down.

The gold rally is just getting started

Is that it? Is the gold rally over?

In my view, no.

The rally is just getting started.

Investors haven’t missed out on the chance to buy into physical gold.

In fact, I believe we are still only seeing institutional money driving the gold price rally.

Right now, the big money is flowing into gold.

Central banks, hedge funds and gold-backed exchange traded funds are increasing their physical position on gold.

And the overall trend so far indicates that the physical gold buying spree is set to continue throughout the year.

You haven’t missed out on the gold price rally.

As I said, it’s just getting started.

Until next time,

Shae Russell Signature

Shae Russell,
Editor, The Daily Reckoning Australia