Gold has pulled back from the elevated levels it reached earlier this month, but remains near US$2,000 per ounce.
How high could the yellow metal rise in the longer term? Speaking to the Investing News Network, Jordan Roy-Byrne, editor and publisher of the Daily Gold, outlined the circumstances that would take gold to US$4,000 by 2025.
He explained that gold is now in a “very bullish” cup and handle pattern, and pointed to a measured upside target that involves taking the depth of the cup and adding it to the top — that would bring the metal to the US$3,000 mark.
“But if you also take the depth of the cup as a percentage, and then you apply that — depending on which levels you pick, because the cup and handle is not perfectly clean — you can have anywhere from US$3,750 to US$4,100,” he said.
Roy-Byrne noted that cup and handle patterns are fairly common on six month and one year charts, but are rare on 10 and 15 year charts, as he is seeing with gold. However, the situation for gold right now is comparable to what happened with Hong Kong’s Hang Seng Index (INDEXHANGSENG:HSI) in the early 1980s, and to the US stock market from 1937 to 1950.
“Those other two cup and handles that I mentioned (Hang Seng and the US stock market) — they hit the first target, the measured upside, which would be US$3,000 for gold, and then in six to 12 months they went to the long target, which is like the percentage target,” said Roy-Byrne. “So based on that you could say gold — if it hits US$3,000, it could hit US$4,000 sooner than we think.”
He also discussed the possible trajectory for silver, saying that if his US$4,000 call for gold comes to pass, “the path forward for silver is going to be nuts, basically.” Although gold typically leads silver, the white metal generally outperforms in the long run.
“Nobody can see the future, but we’re coming into a point in time where the setup is there. That’s what people need to understand — the setup is there for the market, the sector, the industry to really go crazy on the upside over the next two or three years,” said Roy-Byrne. Watch the interview above for more of his thoughts on gold and silver.
Don’t forget to follow us @INN_Resource for real-time updates!
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.