Carley Garner had plenty of doubters when she said the S&P 500 was on the cusp of a big move higher in April.
Stocks were sliding after the failure of Silicon Valley Bank, the Fed was still battling inflation, and recessionary worry was mounting.
Yet, that’s precisely what has happened. The S&P 500 has marched significantly higher since Garner’s prediction, reaching a 52-week high on July 31.
The stock market could still climb, but stocks aren’t what has Garner’s attention right now. Instead, she thinks another asset is about to make a big move higher.
It Could Be A Good Time To Buy This In Portfolios
Investors have a lot of choices when it comes to investing hard-earned cash. They can buy stocks and bonds or invest in commodities like gold.
This year, investing in stocks has performed best, but Garner says there’s reason to believe that gold is on the cusp of a meaningful rally.
Gold is priced in U.S. dollars, so it performs best when the dollar falls, making the precious metal more attractive to overseas buyers.
Unfortunately for gold bugs, the dollar has been making higher lows since late January, capping gold prices. That may change soon because the Dollar Index is approaching levels where sellers may emerge.
“The dollar is currently experiencing a sharp corrective rally, which we believe will continue into the 103.50/104.00 price range. However, unless something changes on the fundamental or trader positioning front, we expect that level to reject the rally and for the dollar to resume its downtrend,” Garner wrote on Real Money Pro.
If the dollar stalls like Garner thinks, it could fall to the mid-to-low 90s, providing a tailwind for gold to break out of a range it’s been trading within for months.
“Gold bugs have been knocking on the door of $2,100 for nearly three years, and history suggests the trading range will prove to be a continuation pattern in which the yellow metal not only breaks above resistance at $2,100 to post new highs but could take the next step higher in the process,” says Garner.
It’s not just dollar weakness that Garner thinks could help gold break out to new highs. Over the past 30 years, gold futures usually begin a seasonal rally in late July or early August. If history rhymes, any additional weakness in gold futures prices may provide investors with a solid buy opportunity.
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Of course, there’s no guarantee that gold will rally, but Garner thinks the odds favor it as long as it remains above $1,800 per ounce. If so, how high could gold climb? Her technical analysis suggests that if gold can move above $2,100 per ounce, it could stairstep as high as $2,600 per ounce.
Given Garner’s outlook, investors may consider investing in gold or buying a gold ETF such as SPDR Gold Shares ETF (GLD) – Get Free Report. The SPDR Gold Shares ETF has $57 billion in assets under management, and its annual expense ratio is 0.40%.
Alternatively, investors who prefer investing in stocks can consider top gold miners, such as Newmont Corporation (NEM) – Get Free Report or Barrick Gold (GOLD) – Get Free Report. If gold prices rally, it will likely boost revenue and profit at those companies.
Newmont produces nearly 6 million ounces of gold bullion annually, making it the largest gold miner. Barrick Gold is the second largest, producing a little over 4 million ounces of gold per year, according to Statista.
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