For all the things tilted in gold’s favor, it sure seems like prices should be exploding higher by now.
Just look at everything that’s unfolded in the past 24 months.
The highest inflation in four decades…
A geopolitical crisis following Russia’s invasion of Ukraine…
A coordinated effort among foreign nations to destabilize the dollar…
A banking crisis that resulted in the second, third, and fourth largest bank failures in U.S. history…
And a federal government deficit topping $1.6 trillion this year. That sent federal government debt levels past $33 trillion.
Many investors see gold as a safe haven asset and store of value. So any one of those catalysts should be enough to get the price of gold moving. Let alone all of them happening at the same time.
But look at the price of gold. It hasn’t gone anywhere. And not just over the past few years, but pretty much for over a decade.
After hitting $1,875 per ounce in 2012, gold trades just 7% higher today. It’s also roughly at the same level as three years ago.
But that doesn’t mean gold has shed its reputation as a fortress during times of uncertainty. It’s just a matter of timing gold’s surge higher.
That means you need a way of spotting when gold could be starting one of its big runs and knowing when it’s time to sit out.
The good news is, there’s a pattern that has predicted many of gold’s biggest runs over the past five decades. Today, I’ll show you what it is, and why it’s pointing to a major breakout for gold.
Gold’s Boom & Bust Cycles
Gold prices have a way of frustrating bullion bulls.
That’s because, historically, gold prices have a habit of going nowhere sometimes… and for a long time.
Even during gold’s epic run in the 1970s, prices spent a large chunk of time going nowhere.
In fact, after hitting a top in 1974, gold prices pulled back 44%. They wouldn’t make a new high for almost four more years.
That happened right in the middle of gold’s 1,344% gain during that decade. Take a look…
Imagine dumping gold after it went nowhere for four years, then missing out on one of its biggest runs ever.
Something similar happened in the lead-up to 2008’s financial meltdown that nearly took down the global economy.
After a five-year decline that saw gold prices drop 37%, gold suddenly recovered to go on a 500% run. Again, that “do nothing” period gave way to a huge rally that lasted into 2011.
And today, there are plenty of catalysts in place to drive gold higher. It’s a matter of watching for signs that gold prices are about to take off.
That’s why you should dial into the gold pattern I mentioned.
Timing Gold’s Biggest Gains
When trying to time when gold prices will rally, take a careful look at one chart and you will notice a pattern.
I’m talking about gold’s monthly price chart, which you can see below. These are closing gold prices every month going back to 1970…
You’ll also notice I included a momentum signal in the bottom panel (orange line). It’s called the relative strength index, or RSI.
The RSI measures price momentum. It looks at how recent prices are closing relative to a historical range. If the price stays near the high end of its recent range, it tells us there’s a strong uptrend.
This is where that gold pattern comes in.
Gold can experience powerful moves when the monthly RSI goes above 60. In fact, of all the times gold saw a monthly gain of 5% or more, the RSI was above 60 on about two-thirds of those moves going back to 1970.
As you might expect with that stat, some of the strongest uptrends were marked by an RSI rising and staying above 60. It happened in 1977, 2002, and again in 2009.
And now we’re on the cusp of seeing the monthly RSI above 60 again – just as gold is on the verge of breaking out to new all-time highs.
Nomi has been showing you the big-picture catalysts in place for gold.
In fact, in this investigative report, she showed how every time the elites change the rules to preserve their own power, gold rushes higher as a result.
And that’s exactly what she says is happening right now. (Get the scoop from Nomi here.)
Now, the price chart is aligning with momentum indicators. This tells me an important breakout could be just around the corner.
If gold can sustain an advance over $2,000 per ounce, and the monthly RSI stays above 60, you’ll want to be on board for the move higher.
Regards,
Clint Brewer
Analyst, Inside Wall Street with Nomi Prins