An often talked about concept in gold trading is the idea of a “breakout”, which is when the price of gold rises above a certain level, signaling a potentially profitable time to buy. This concept is currently being discussed by the famed gold trader David Morgan, who believes we could be on the brink of a gold price breakout.
In recent years, the gold market has seen a significant drop in prices, but Morgan believes these are signs of a “false” bottom that could be setting the stage for a major breakout. He notes that the gold market had been in a deflationary spiral for the past decade, seeing its value slowly but steadily decline. But Morgan believes the recent stability in the gold price could indicate that it’s in the early stages of an upward breakout that could take gold prices back to their previous all-time highs.
Morgan cites a number of factors that could be driving this potential breakout, including geopolitical uncertainty in the Middle East, increased demand for gold from China and India, and expectations of an eventual U.S. rate hike. In addition, Morgan also believes that gold could benefit from a “flight-to-safety” from weak stock markets, coupled with a shift toward real assets.
When asked what other markets could be affected by a potential gold price breakout, Morgan replied “silver and the precious metals mining companies have a lot to gain if gold does break out. Even the currencies, if gold moves markedly it gets people back into their paper assets that look safe.”
Ultimately, the success of any breakout in gold prices comes down to whether or not enough buyers are in the market to take advantage of a possible upturn in value. Morgan encourages investors to be prudent in their decisions, recommending that they buy physical gold or invest in gold-backed ETFs in order to gain exposure to this potentially lucrative market.
Whether or not the gold market is seeing a breakout is something only time will tell. But with the potential for a significant move higher, many investors are keeping an eye on the market with anticipation.