A Perfect Storm Is Brewing in Gold Markets
The comments below are an edited and abridged synopsis of an article by Tom Kool
Gold has jumped nearly 7% over the past month to trade at levels it touched nine months ago as an invasion of Ukraine by Russia kept safe-haven demand strong. Spot gold was trading at $1,919.20 last week , a 6% increase since the beginning of the year and a level it last reached in June, 2021.
But some analysts are now saying that the Ukraine tensions will only serve to trigger something much bigger.
Chris Vermeulen, Chief Market Strategist of TheTechnicalTraders.com, says that gold remains in a secular bull market, with a long-term technical bull cycle that mirrors the beginning of 2008.
But here’s where it gets interesting: Vermeulen says that gold is set to hit $2,700 in one year, and up to $7,400 in five years as a perfect storm brews for the traditional safe haven.
According to Vermeulen, gold miners and commodities are set to outperform the broad equity index. And so far, that appears to be the case.
The broader commodity market has been even more impressive.
The Bloomberg Commodity Index has rallied 14.5% YTD and 30.8% over the past year as supply chain snags and robust demand continue to fuel one of the biggest commodity rallies of modern history. For instance, copper, cobalt and aluminum prices are at historical highs as the green energy revolution continues fueling robust demand growth.
The green metal rally appears to have staying power, with prices of green metals projected to reach historical peaks for an unprecedented, sustained period in a net zero emissions scenario.