Masters Series: Why Gold Could Climb Nearly 20% in the Next 12 Months
Editor's note: Historically low interest rates are terrible news for paper money... and great for gold.
But that isn't the only catalyst for higher gold prices right now.
In today's Masters Series essay – originally published in the March 8 DailyWealth – True Wealth analyst Brett Eversole discusses another factor that could send gold significantly higher over the next year...
Why Gold Could Climb Nearly 20% in the Next 12 Months
Gold is up... And it could go up a lot more...
A gain of 16% to 19% over the next year is entirely possible, based on history.
Let me explain...
Most folks don't realize it, but gold has several factors in its favor today. And they make much higher prices likely. Here's what I see when I look at gold...
- Gold has fallen dramatically in recent years.
- It's staging an extreme breakout right now.
- For the first time in years, gold is "up" over the last 12 months.
Let's examine each of these. Because they could lead to nearly 20% gains over the next year.
First, gold has fallen dramatically in recent years. From its peak in 2011 to its trough in December 2015, gold fell 37%. But since then, it has clearly "broken out."
A big fall followed by a major breakout is exactly what we want to see as investors. It means we have a safe opportunity to buy. But the opportunity in gold is even better than that.
You see, the recent breakout comes thanks to a big 8% gain in January... and another 11% gain in February. But monthly gains of that size are rare.
This has only happened 7% of the time going back to 1975. Importantly, this extreme monthly move is a good thing for gold prices going forward... The table below shows the full details...
| Gold Returns |
1-Month |
3-Month |
6-Month |
12-Month |
| All periods |
0.5% |
1.6% |
3.3% |
7.6% |
| After being up 8% in one month |
1.3% |
2.4% |
7.1% |
18.9% |
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-
-
-
More than 40 years of history show that when gold climbs 8% or more in just one month, it tends to outperform going forward. And that outperformance is consistent, regardless of the time frame.
Importantly, based on the extraordinary performance in January, gold could deliver a gain of up to 19% over the next year.
But it's not just the one-month move that's important...
Gold is actually "up" over the last 12 months. This is big news.
A positive 12-month stretch in gold returns has been tough to come by... Since the end of 2012, only two months showed positive 12-month trailing returns (out of 36 possible months) – until 2016.
Gold does extremely well after a positive 12-month performance. Take a look:
| Gold Returns |
Annualized Return |
Time in Trade |
| All periods |
8.0% |
100% |
| UP over the last 12 months |
16.1% |
59% |
| DOWN over the last 12 months |
-2.9% |
41% |
-
-
-
Specifically, this is the performance of gold in the month AFTER a positive 12-month gain, annualized.
In short, you want to own gold, now.
Yes, gold has done well... But based on history – these solid recent gains tell us that we could have more to come.
Good investing,
Brett Eversole
Editor's note: Many of the world's economies are struggling today... and some of the world's biggest hedge funds and government leaders are worried that the U.S. could be the next to introduce negative interest rates... causing a panic out of paper money and into gold. Steve Sjuggerud recently put together a video presentation detailing his single favorite way to profit from this dangerous possibility. Watch it here.