Gold Stocks On Verge Of 2023 Breakout
Is gold going to emerge as the best bet for 2023?
There are a lot of indicators that say so.
Inflation, persistent government spending, and, most importantly, gold has been out of favor for a long time.
Aside from two decent run-ups in 2016 and at the start of the pandemic in 2020, gold has been flat since it set a record high in 2012.
This is an explosive combination that could lead to major gains ahead.
And when gold goes up, gold miners absolutely fly.
3 Factors Driving Gold Prices
Earlier this week we reviewed how Goldman Sachs predicted a new supercycle in commodities.
There was “a catch” though.
The commodity boom would have to coincide with a general economic recovery (or at least a cessation of the downturn).
That could come later this year too. But it’s a big “could.”
Gold is a different animal.
And once you see the fundamentals that have been driving gold prices up over the last few months you’ll understand there could be some big gains for gold ahead.
Here are three main drivers of gold prices that could propel gold to past highs and beyond:
1. Dollar Downturn
The U.S. dollar has been one of the strongest currencies in the world since 2021.
Despite surging inflation, the U.S. dollar has remained strong.
The U.S. Dollar Index, which compares the dollar to a basket of other major currencies, has climbed recently to its past highs in the early 2000s and mid 1980s.
The chart shows the U.S. dollar index:
Weakness in the U.S. dollar – and there are many expected causes for it – is bullish for gold.
We don’t even need to see a major decline. Just a return to normal would be enough to give gold a big leg up.
2. Central Bank Pivots Ahead
The Federal Reserve has signalled the rate hikes are winding down
According to the Fedwatch Tool, which combines the interest rate futures markets into a single probability of the Fed’s next actions, the rate hiking cycle is nearly over.
It also found there’s a 75% probability it will actually start cutting interest rates before the end of the year.
Here’s the key though, it’s not just the Federal Reserve. Central banks around the world are in a similar position.
Gold has held up well in one of the most aggressive central bank tightening cycles in years.
If and when they reverse course, gold prices could take off.
3. Everyone Looking To Buy Something
This is the final one and it’s a bit more on the market psychology side.
The last year or so has been disastrous across most sectors.
The financial markets are itching for something to go up.
When it does, the huge amount of money that has been waiting on the sidelines will come pouring in.
Gold, given the fundamentals, has the potential to be that asset that could really fall back into favor.
If it does, watch out. The gold market is relatively small. The total gold in the world is only about $10 trillion.
Any sizable surge in investor interest could easily send gold back to its past highs and beyond.
Conclusion
Gold is in position to be a breakout star in 2023.
It has been slowing building steam.
It didn’t get caught up in the madness of 2021 and 2022 like high-flying blockchain, tech, NFT’s, etc.
So it didn’t get crushed in 2022 and lay investors out.
That alone makes gold a standout.
But when you look at the fundamentals, everything is in place for a big run for gold.
Because gold returning to past record high of $2100 will have big money plowing back in and you’ll want to be there for the amazing ride few sectors outside of gold and gold stocks can provide.
They say there’s no fever like gold fever…because it’s true.
If investors catch a case of gold fever, you’ll want to jump on it in a big way.
