Gold is above US$2,000 per ounce once again, and Omar Ayales of Gold Charts R Us thinks higher prices are coming. He’s tracking a seven to eight year cycle in gold, and said the next peak is set to occur in 2026 or 2027.
‘What this cycle is telling us is not only that gold reaches a bottom every seven years, (but also) that after it reaches a bottom it goes into an 11 year uptrend to reach a high. So every bottom precedes an 11 year move,’ he explained.
In his view, it’s a matter of when — not if — the yellow metal breaks its all-time high.
‘Will gold break out on this up move — maybe not. Maybe it reaches US$2,075, maybe it pulls back to around the US$1,900 level before it makes another up move. That is very possible,’ Ayales said.
He added, ‘I am overall very bullish for gold, and (believe) it will break to new highs. It’s a question of will it happen over the next month or two, or will it happen in six to nine months. But I think it will happen.’
Ayales sees short-term support for gold at US$1,925, while a more intermediate support level is around US$1,800. In the unlikely event of a crash, US$1,675 to US$1,700 would be ‘mega support’ for the precious metal.
Looking at the larger economic picture, he’s expecting a higher-rate environment for the next 30 to 40 years.
‘The chart that I look at is the yield on the 30 year US Treasury bond. Basically the yield on a US Treasury bond for me tracks very well long-term inflation expectations,’ Ayales explained. ‘The long-term Treasury market moves in secular shifts of 30 to 40 years … (and) the last mega market in Treasuries actually was the past 40 years.’
With that in mind, he encouraged investors to consider adding gold and gold stocks to their portfolio.
‘I think that one of the things that investors have to see moving forward is if we are going to be in a 30, 40 year bear market in Treasuries, you don’t want to have such a big (allocation) to Treasuries. You want to be able to have that 40 percent of safety in your portfolio with other things, such as gold, such as gold miners,’ he said.
Watch the interview above for more of Ayales’ thoughts on what’s ahead for gold.
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.