Chart of the Day: Gold Prices Ready to Takeoff – Peter Schiff Talks

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Gold Permabull Peter Schiff recently weight in on where the price of Gold is going. He states that Gold has been rangebound of late, bouncing between $1,750 and $1,800 an ounce for several months. Given the inflationary environment, one would expect Gold to be soaring. So, what’s going on with the yellow metal? And when will the price of Gold go up? Peter Schiff tackled this question during a recent Q&A session on YouTube below.

 

Schiff further asserts that the meteoric rise (and dips) in bitcoin have perhaps skewed expectations. Gold is not going to act like bitcoin. It’s a real asset, and it’s a real market. And it’s not going to have that kind of parabolic move. Unless, of course, you have a complete implosion of the dollar, which is certainly not off the table as far as what may happen in the future. But, if that’s the case, it’s really not the price of Gold going up. It’s just the value of the dollar going down. But the direction is already clear. And that’s up. And it’s been going up for some time.

Gold vs. Stocks long-term:

Often the question comes up whether stocks or Gold are a better long-term investment. It should be noted that stocks are a real investment of income-producing financial assets. Gold does not yield anything, being rather an inflation hedge, though important today given the recent rise in inflation.

See here and in the below chart to answer the question of which is a better investment over the long term – stocks or Gold. The chart has color-code indexes – S&P 500 Price Index and the Dow Jones, the Wilshire Large-Cap which is a total return index, in which all resulting cash payouts (including dividends) are automatically reinvested back into the fund itself. Therefore, it includes all capital gains and allows for an accurate performance comparison with Gold and Silver.

total-return-stock-gold-historicalGold Technical Analysis:

Gold is currently trading on a long-term trend line at the $1800 level. It is trading in the wedge. It will either break down or break up out of the wedge. Historically, 80% of the time, wedges break out in the direction of the trend – in this case, up. The price target on the break out of the wedge is the width of the wedge (points A to B, or $600 difference). Using this as a price distance guide, the price typically will rise the same distance as the wedge width identified in the below chart (points D and C, or $600 difference). This makes the next target level $2400 or more if the move becomes parabolic.

Typically long-term price moves are in three waves, the third being the biggest move. This coming move would be the second wave. This means that over the next 18 to 24 months, Gold could move toward the $5000 per ounce level in a third wave, though this would be the most optimistic long-term price target. Of course, if the economic situation gets dire, anything is possible.

GOLD_2021-11-03

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A few takeaways to consider:

  • Given that the stock market may be at a bubble high (see here), it may make sense to shift your portfolio allocation to 10 to 15% in Gold rather than park dormant money in cash – waiting for a pullback in stocks to get back in at better prices.
  • Long-term stocks outperform precious metals when considering a total return. Investments in Gold are typically inflation hedges over the short term. However, Gold is better than cash.
  • Over the next year, Gold looks to advance. Perhaps a risk of $200 to $600 per ounce to the downside with an upside potential of $600 to $3000 per ounce profit opportunity on the upside, though there are never any guarantees. This looks to be a reasonable risk-reward scenario.

The Right Wire Report does not provide investment advice. This post is for information only and is not a solicitation for you to buy or sell any financial asset.

See more #chartoftheday posts.

 RWR original article syndication source.


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