• How high can the gold market go? It's foolish to try and pick a top, akin to stepping in front of a runaway train. 

• It could be argued the gold market is outside both fundamental and technical analysis at this time. 

• Someday the market will roll over, much as the fictional ship The Poseidon did. 

Near the end of each week, Kitco News^[i] sends out 3 poll questions to investors and analysts in the gold market. The first two weekly questions are: 

• Where do you see gold’s price headed next week: up, down, or unchanged?
• Why? 

Over the last number of weeks/months my answers have gotten shorter and simpler, with my latest being: 

• Up
• Nothing has changed. There is no reason for the gold market to go down long-term. 

After sending in my answers, my friend and Kitco reporter Ernest Hoffman called. We then had an in-depth discussion that included the key question, “How high do you think gold can go?”

From a fundamental point of view, one of the points Ernest made in our discussion was US investment traders haven’t bought big into gold yet. What happens when they do? When it comes to a safe-haven position, price is seemingly of no concern. My point to him was according to news late last week, there is growing evidence the rest of the world has lost confidence in the United States as a serious global entity:

1. The US dollar (($DXY) is collapsing, hitting a new 3-year low Monday (April 21) morning of 97.92 as global investors continue to sell.
2. US stock indexes (($INX) ($DOWI) ($NASX) turned bearish with all three major markets dripping more than 20% from all-time highs set this past winter.
3. The gold market resembles a runaway freight train as it clicks by $100 levels at a quickening pace.

Regarding the latter, the June futures contract (GCM25) hit a high of $3,442.30 Monday morning, up $113.90 (3.4%) from last Thursday’s close. For the record, using its weekly bar chart (open/high/low/close) June gold crossed:

• $3,300 for the first time last week
• $3,200 for the first time the week of March 31
• $3,100 for the first time the week of March 24
• and the big $3,000 line the week of March 10

How high could gold go? As I told Ernest, it is foolish to try to pick a top. Having said that, as I was typing this piece I saw Barchart had reposted a study stating, “Gold to hit 5,000 by end of 2026”. I agree with one reply: “At this rate we will be there by fall”. The author of this opinion was using price charts to make his projection, once again raising the question of if technical analysis matters these days, particularly given the increased global market, economic, and political mayhem that continues to be seen. 

How should we look at the gold market? The first thing that comes to mind is my Market Rule #1: Don’t get crossways with the trend. I’m not talking about making projections based on archaic technical tools but rather gauging the trend (price direction over time) and waiting for a clear sign of a reversal pattern. What I mean by this is if I’m a long-term investor in gold, I’m waiting for a new 4-month low to be registered by either the spot market or gold’s cash index (GCY00). Looking ahead to May, that would put the reversal signal at the January 2025 low of $2,607.16. That is a long way below where the index is priced ($3,315.31) Monday morning. Until then, it’s best to ride the runaway train rather than step in front of it. That usually doesn’t end well. 

However, there is one other market idea we have to consider, what I like to call the Poseidon Predicament. This tells us, “When everyone is on the same side of the boat, the boat tends to roll over”. Maybe not today, or next week, or next month, but at some point this boat will roll over. (Yes, I understand I switched from a train to a boat.) My guess is when those same US investment traders finally start loading up on King Gold. At that point the top could be near, and global investment money might start rolling over to silver. 

But that’s a discussion for another day. 
 

^[i] From its website: With over 40 years’ experience, Kitco is regarded as one of the world’s largest online retailers and full-service providers of precious metals in the world. Additionally, Kitco is considered to be the leading commodities media organization, recognized internationally for its authority, integrity, and accuracy.