As an analyst with over two decades of experience navigating the intricacies of global markets, I find myself constantly amazed at how markets evolve and surprise us. Watching gold’s recent rally from my vantage point has been a fascinating spectacle that serves as a stark reminder of the power of patient analysis and strategic foresight.
On September 23rd, analyst Benjamin Cowen shared a new video discussing the current trends in the gold market. In this video, he mentioned that it had been about a year since his last gold-related video, when the price of gold was approximately $2,000 per ounce. At that time, Cowen predicted that gold would follow a path similar to its behavior in 2019, surpassing a significant resistance level and then rising significantly. He pointed out that this breakout did happen, and as a result, gold has increased by around 27%, reaching more than his initial prediction of $2,500 per ounce. As he looked back on this surge in price, Cowen expressed his delight at how rapidly gold managed to reach these gains.
Cowen highlighted that even though some cryptocurrency investors might not find gold appealing as an investment, it plays a significant role in predicting broader market movements. In particular, he pointed out that gold’s performance in March 2024 signaled an approaching mid-cycle peak for Bitcoin, which could lead to a six-month downtrend. Cowen suggested that astute investors could have leveraged this insight to foresee the crypto markets’ cooling, despite the general optimism at the time.
Despite gold’s underperformance compared to the S&P 500 over extended periods, Cowen emphasized that there are instances when gold plays an essential part in investment portfolios. He specifically referenced the 2001-2011 bull market during which gold surged by a staggering 600%, while the S&P 500 saw minimal growth due to the dot-com crash and financial crisis. Cowen reminded us that gold can serve as a buffer against broader market slumps, particularly during stretches when traditional stock markets falter or experience a downturn.
Cowen also discussed the concept of the bull market support band for gold, a key technical indicator he uses to assess long-term trends. Unlike Bitcoin, which uses weekly moving averages, gold’s support band relies on monthly moving averages (the 20-month SMA and the 21-month EMA). Cowen highlighted that throughout gold’s decade-long bull market, it consistently found support at these levels, except during the financial crisis, when it experienced a significant drop. This technical support has continued in gold’s current bull market, with Cowen noting that the metal has remained above its support band since 2019.
Moving forward, Cowen anticipated temporary drops in the price of gold, but he doesn’t consider these as grounds to sell off investments. Instead, he sees them as possible chances for individuals wanting gold exposure. Furthermore, Cowen emphasized that gold market bull runs can persist for over a decade compared to crypto markets. He highlighted that although gold’s price fluctuations may be gradual, they tend to be more enduring in the long run, making it an appealing option for long-term investors.
According to Cowen’s analysis based on historical trends, gold could reach approximately $3,160 by the year 2024 and might even touch $3,500 by 2025. He admitted that these figures might appear lofty, but gold’s past performance demonstrates its capacity to maintain a strong upward trend for an extended duration once it starts gaining momentum. However, Cowen advised investors to brace themselves for possible pullbacks during the journey, as such corrections have been common in previous gold market bull runs.
In contrast to cryptocurrencies like Bitcoin, changes in the value of gold are typically smaller on a daily basis according to Cowen’s explanation. For instance, a 0.5% increase in gold would be considered a strong performance, whereas such a rise might be deemed minor or inconsequential within the crypto market. This observation by Cowen indicates that the investors drawn to these two asset classes differ, with gold generally attracting those who prioritize stability and long-term wealth preservation.
As a researcher delving into the realm of investments, I can affirm that Cowen underscored the persisting value of gold even amidst the allure of cryptocurrencies. Gold may not offer the thrill or unpredictability as digital currencies, but it stands steadfast as a crucial asset for those aiming to safeguard their portfolios against equity market slumps. In times of financial turmoil, gold’s purpose in a diversified investment mix isn’t to outperform the S&P 500 or Bitcoin over the long haul, but rather to bring stability and resilience. For investors who are bracing for a potential S&P 500 selloff, Cowen advocates that gold could function as an efficient shield in tandem with other conventional safe-haven assets such as bonds and fixed income.
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2024-09-24 11:12