Gold Could Rise By 50%

Summary

•Gold has seen a reversal of fortune – last time this happened it rallied for 10 years.

•The dollar is toast – get ready for gold to rally strongly.

•Central banks and hedge funds are buying – why aren’t you?

Of all the commodities I watch, gold is perhaps the most interesting. The reason I’m drawn to the commodity as an investment vehicle is due to the sheer intrigue of searching for reason and clarity in the opaque market. On one day, inflation headlines drive the commodity to new heights. On another, a perception of risk is attributed to price movements. The factors driving the gold are numerous. However, with gold experiencing one of the largest upwards price movements ever recorded in a quarter, we should probably take a deeper look and see what’s afoot.

Another factor which strongly indicates gold is in for a lift is volatility. You see, when gold bottoms or starts to increase, it tends to do so quietly. I believe the reason for these quiet beginnings is that many purchasers of gold (Russia, China, etc.) prefer secrecy and do not wish to move the market while buying. These countries will purchase billions of dollars worth of the commodity and the market hardly moves or just slightly drift upwards. The slight upwards drift is of course due to the skill of their traders who are able to secretly and consistently pull supply from the market. As supply is constrained, the market begins to wake up to the lack of available gold and price begins to rise cataclysmically.

Look at the level of volatility we are seeing in the market. Notice how price tends to peak in high periods of volatility but bottom in low volatility? This is the relationship I’m referring to. We are at a bottom in volatility. Central banks and hedge funds are buying with abandon. Why aren’t you exposed to the commodity? It really is time to buy gold!

Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in NUGT over the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha
Apr. 28, 2016 11:51 AM ET