Suddenly, everyone is talking about gold.
That old relic of a metal that almost no one cared about a month ago, is now one of the most popular topics on Twitter.
Financial media talking heads are turning bullish on gold. And the most common question I get from friends and relatives is, “Is it too late to buy?”
There’s no easy way to answer that question…
In hindsight, the best time to buy gold was four weeks ago when we warned, “This Sleeping Giant is Ready to Breakout.”
Here’s an updated look of the chart I showed you back in February…
Now, gold has broken out to the upside of a year-long consolidating triangle pattern.
It looks headed to our upside target just above $2,000 an ounce. It might even get there this week… or even today.
But I’m not sure the risk/reward setup justifies buying gold right here – $140 an ounce higher than where it was last month.
The Commodity Channel Index (CCI) – a momentum indicator at the bottom of the chart – is well into overbought territory. Though, the MACD and RSI momentum indicators still have room to push higher.
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So, the signals are mixed. That likely means there may be more upside ahead, but we’re approaching a turning point.
And, with investor sentiment (a contrary indicator) having shifted so quickly from bearish to bullish, the risk of a short-term price reversal is greater than the potential reward of a continued move higher.
Traders who already own gold can hang on and ride the rally towards our upside target.
Folks who don’t own any gold yet need to understand the risks of chasing the price higher into overbought conditions.
We might see a better risk/reward setup one or two months from now than what we’re looking at today.
Best regards and good trading,
Jeff Clark
Reader Mailbag
Did you buy gold last month? Or are you considering buying it now that it’s trending?
Let us know your thoughts – and any questions you have – at [email protected].