Investors have many options for investing their hard-earned cash. Stocks and bonds or commodities like gold are among the most common choices.
Stocks have been the biggest winner since fall, but gold bugs can't complain. The precious metal has increased sharply since last summer, surprising many who thought it would struggle as inflation fell and investors' interest returned to stocks.
One person who wasn't caught flat-footed by the gold rally is TheStreet Pro's Carley Garner, an analyst who has been using futures to track markets, including gold, for over 20 years.
Last summer, Garner suggested gold could be on the cusp of a big move up, predicting 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."
Sure enough, that outlook panned out. Gold prices surged this month, closing at $2,208 per ounce on March 20.
The move caught Garner's attention, leading her to update her gold price target.
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Gold's rally may have room to run higher
Because gold is priced in U.S. dollars, it tends to do better when it weakens, spurring demand from overseas buyers.
Fortunately for gold investors, the U.S. dollar index, which tracks the greenback against other major currencies, retreated from 107 in September to 103 this month. It was near 105 in mid-February.
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The dollar's downtrend has helped gold, but other reasons may also contribute to its move higher.
The war in Ukraine continues to drag on, with drone attacks regularly hitting Russian refineries. A resolution to the Gaza conflict remains uncertain, too. And China's sabers are still rattling. There's also still a lot of money sloshing around in money markets that could be searching for higher returns.
"It appears the market has finally been able to break out for no particular reason other than to catch up with the narratives that price action has been shrugging off," wrote Garner recently.
The improving gold price is somewhat surprising at this point of the year.
Historically, seasonality for gold prices in March has been lackluster. The fact that gold prices have moved up this month has Garner drawing comparisons to 2010.
"Today's circumstances have a lot of similarities to the 2010 gold rally in which there was a late 2009 rally, followed by a shallow correction in January/February before a massive breakout to new all-time highs ($1250)," wrote Garner. "The buying finally exhausted itself in August 2011, just under $2,000 per ounce. If you are doing the math, that is a roughly $700 run or a 56% increase in gold price."
If we experience a similar move, Garner notes that it wouldn't be out of the question to see gold continue up to $2,600 per ounce this time around.
"Precious metals habitually spend years in a trading range only to forge large and explosive rallies when market participants least expect it," said Garner. "Sidelined traders wishing they were in the market are susceptible to FOMO buying, forcing prices to levels that previously seemed out of reach. We believe gold is finally really to make such a move."
Given Garner's optimism, investors may consider investing in gold or buying a gold ETF such as SPDR Gold Shares ETF (GLD) . It has $58 billion in assets under management, and its annual expense ratio is 0.4%.
Investors interested in stocks can consider top gold miners like Newmont Corporation NEM, Barrick Gold GOLD, or Harmony Gold (HMY) .
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Newmont is the largest gold miner, mining nearly 6 million ounces of gold bullion annually. Barrick Gold mines about 4 million ounces of gold per year, according to Statista.
TheStreet Pro's Bruce Kamich finds Harmony Gold particularly intriguing. Kamich has used technical analysis to evaluate stocks, bonds, and commodities for 50 years, and he recently analyzed Harmony's stock price charts.
"Harmony trades above the rising 50-day moving average line and above the rising 200-day line," said Kamich. "The On-Balance-Volume (OBV) line shows us a slight decline from May to February before turning upwards. The Moving Average Convergence Divergence (MACD) oscillator is now in a positive move above the zero line."
On-balance volume measures up minus down day volume while the Moving Average Convergence Divergence (MACD) oscillator is a momentum indicator. Kamich used a point-and-figure chart to calculate a price target for Harmony Gold of $10 per share.
Gold may not be the right choice for every investor, but allocating a small percentage of assets toward it could be wise.
"Gold isn't for everyone. It doesn't pay interest and can go years or even decades without progress. Yet, it occasionally presents opportunities for those with conviction and patience. This might be one of those years," concluded Garner.
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