Historic repeats: calculated buy price where hedge funds will load gold
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
Gold is repeating its exact playbook from history as it nears a major surge higher in 2021. Studying the gold chart going back 40+ years reveals some truly amazing things to smart investors.
Let’s start with the high pivot from 1979 when gold surged to $876/ounce. That high pivot led to 29 years of consolidation before price broke briefly above that high in 2008. After the high from 1979 was breached, the price of gold pulled back a perfect Fibonacci 38.2% over the course of 7 months. It then pushed up, breaking above the 1979 high and surging to $1,910/ounce in 2008.
The $1,910/ounce high in 2008 stood strong until July 2020 when gold briefly surpassed it. Just like in 2008, price has pulled back under that 2008 high pivot. Investor expectations should be for the same Fibonacci 38.2% retrace of the move over 7 months before gold will begin moving higher, this time headed for 2,900/ounce. The target is based on a measured move calculation which will be explained in a future article. This gold target will be achieved by 2023.
Based on the Fibonacci retrace, commodity investors should expect a retrace on gold to $1,749/ounce by January/February. This would align the gold pull back to exactly the pullback experienced in 2008 before it surged to $1,910/ounce. Hedge funds are already licking their chops as gold has pulled back to $1,800/ounce. One final flush should be the buy level for the next major move higher. Note the chart below.