After going on record saying that I think gold will break out in 2019, it’s gratifying to watch precious metals soar on days like today.
As nice as it is to see such steep increases on the charts, it’s dangerous to get too excited about daily fluctuations. It’s more important that gold is continuing a strong trend that’s developed over the last six months.
As encouraging as that is, it’s too early to break out the Dom Perignon. Precious metals have not gone any higher than we’ve seen in multiple rallies over the last few years—rallies that failed.
To show that the market has indeed changed, gold needs to break above the trading range we’ve seen since 2013, and stay there.
I’m not a technical analyst, but to me it seems that $1,400 is the number that would really move the dial here. Silver’s even further from making new highs, by the way, needing to retake the low $20s to really show it’s breached resistance.
I don’t want to rain on anyone’s parade here. I’m very glad to see gold and silver climbing, just as I predicted. But it’s not my job to be a cheerleader for gold bugs, telling them their team will surely win.
It’s my job to offer you the most levelheaded guidance I can.
And the fact remains that we’re not out of the woods yet. We’ve seen rallies just as strong as this one falter.
That said, I may permit myself a bit of champagne tonight, given that every one of the precious metals stocks in The Independent Speculator portfolio was up today. But I’m saving the Dom Perignon for $1,400.
The good news is that we still have time to build solid positions in great companies before the real breakout. Just remember not to do it on days like today. As long as the trend continues, you’ll make more money buying on the down days for gold and silver.
Caveat emptor,
