Conservative Gold High Target for 2018: 1434

Flashback to Stateside Tax Day, 15 April 2013. Do you remember what really got “taxed” that day? Gold: high-to-low it fell 160 points from 1495 to 1335, the largest single-day points thrashing through this millennium’s 17 years, and on a percentage basis (-10.7%), the third worst of the bunch. Following that fallout, Gold continued through springtime attempting to spring back, only to then bang about between the upper 1300s and lower 1400s. Then come  August 28 of that year, Gold reached up to tag 1434, only to have traded lower ever since. That’s the bad news.

The good news is that the rampant, bad-mouth impugning of Gold is down to a few also-rans, (who perhaps are blindly buying bitcoin). And let’s face it: not only has Gold’s price consolidated since the December 2015 low of 1045, but despite seemingly having been stuck forever in the 1200s, it has put in fairly respectable years back-to-back with net gains of 9% in 2016 and now 13% for 2017, closing out the latter yesterday (Friday) at 1305.

Of course since the Dollar’s unraveling to the Gold Standard, from 1975 there have been 25 up years for Gold, their median annual net gain being 18%; (for the 18 down years, their median annual net loss is 8%). So the two most recent years of net percentage gains for Gold have clearly been below par. And per the above Scoreboard, the dirty little secret is that Gold by U.S. currency debasement alone ought rightly be presently priced at 2781. To reach that level during 2018 requires a price rise of 113%. It’s not gonna happen, (barring 2018 becoming a re-run of 1979 when Gold recorded a net gain of 136%, 1978’s gain running a distant second at only 37%).

That said, we see very minimal downside risk for Gold in 2018. Rather, the key is yet again returning up to Base Camp 1377 (2016’s high and 2017’s “near high” of 1362). Then at 1377 we look for the fun to begin. You know the old trading expression that “Triple tops are meant to be broken”? As price closes in on 1377, it wouldn’t surprise us a whit to see a zillion buy stops hit the market just in or above there. That in turn ought open the top fuel dragstrip for the nitro-burning drive back above 1400, the finish line being a retest of 1434 for the year’s high. Dramatic? Perhaps. But still conservative as the overall run from 1305 to our 1434 target would be but a 9.9% gain.