Editor's note: You must consider owning gold... Longtime investors know all about gold's role as a "chaos hedge"... It's a way to protect your wealth during times of uncertainty in the economy and stock market – like we're experiencing right now. That's why True Wealth editor Brett Eversole believes it's critical for you to have some gold exposure in your portfolio in order to protect your wealth moving forward. In today's Masters Series, adapted from the April 9 and April 25 issues of the free DailyWealth e-letter, Brett discusses why many investors are reluctant to explore the gold market... explains why gold is overbought right now... and details how this bullish run is poised to last much longer...
Why This Gold Rally Isn't Stopping Anytime Soon By Brett Eversole, editor, True Wealth There's nothing better than a hated bull market... This type of market doesn't come around often. The entire premise goes against how markets tend to operate. When prices rise, investors usually get more excited. Folks see the allure of fast profits and throw caution to the wind. This quirk of market psychology is as crucial to understand as fundamentals, economic trends, or interest-rate changes. It also means that if you find a rising market that investors want nothing to do with, the boom is sure to continue. That's the situation we have in gold right now. After years of going sideways, gold is finally staging a massive breakout... The metal finally broke above $2,000 per ounce – a key level for gold – late last year. And it has been off to the races ever since. Gold has soared since early March. The metal hit new all-time highs last week. And the rally recently reached a rare setup... The metal just hit major "overbought" levels. Normally, that would be a bad sign. But as I'll explain today, it points to double-digit upside over the next year... Overbought setups tend to be a major warning. They signal that an asset has soared too high, too fast. It's like a stretched rubber band that's bound to snap back soon. When the reversal comes, it'll be quick and painful. This is the setup in the gold market right now. The metal has absolutely soared. And based on the relative strength index ("RSI"), it has reached overbought levels. The RSI looks at the recent price action and determines if a rally or crash is too extreme. A reading below 30 signals "oversold" levels, which usually means a rally is incoming. Similarly, a reading above 70 signals overbought levels. A decline usually happens from there. This time around, gold has blown through typical overbought levels. The RSI recently hit 84.5. That's the highest RSI reading we've seen for the metal since 2020. Take a look... According to this measure, gold has soared too far, too fast... So we'd typically expect lower prices in the months to come. But history shows this pattern hasn't held true for gold. To see it, I looked at each unique instance when gold's RSI soared above 80. That's darn rare. It has happened just 28 other times in nearly half a century. And after those cases, gold tends to keep rising. Check it out... Gold has been a winner for investors for roughly 50 years. It has risen 5.6% a year over that time. But you can do much better if you buy after setups like today's... Similar situations led to 4.5% gains in six months and 11.5% gains over the following year. That's fantastic outperformance – more than double the typical buy-and-hold return. And gold was up 68% of the time a year later, too. That's exciting in its own right... But the lack of investor interest is just as noteworthy. You see, the current gold boom is nothing like the ones we saw in the past two decades. Those were the typical booms you'd expect. Prices soared. The big gains thrilled investors... So they kept flooding in. The opposite is happening today... We can see this by looking at shares outstanding of the two largest gold exchange-traded funds ("ETFs"). I'm talking about SPDR Gold Shares (GLD) and the iShares Gold Trust (IAU). The two funds are massive, with nearly $100 billion in combined assets. ETFs create and liquidate shares based on investor demand. That means these funds issue more shares if investors want gold... And they remove shares when investors aren't interested. Given gold's recent rally and the new all-time highs, we'd expect share counts to be rising. But we're seeing the opposite situation play out. Take a look... The chart shows the combined share count of GLD and IAU. Shares outstanding for both funds have been falling for years. They're down a combined 30% since peaking in 2020. You might look at this and think that investors will never get on board with this gold boom. But that idea fights investor psychology... The truth is, investors care about one thing: making money. And gold is becoming a moneymaking asset. The current gold boom has moved into overbought territory. History shows this new wave of buying should catapult the current bull market to even greater heights. In short, we're still in the early stages of a major bull market for gold. And we'll see the biggest gains as sentiment continues to reverse. Now is the time to get in position before the crowd wakes up and starts buying. And that means now is the time to get exposure to gold. Good investing, Brett Eversole
Editor's note: This gold rally isn't the only development we're monitoring right now. You see, a huge move is about to take place in the metals market that could send gold soaring even higher – creating the chance for triple-digit gains for investors who are paying attention. So, Brett recently joined forces with Gold Stock Analyst editor John Doody to reveal how you can capitalize on this rare setup. And they shared the name and ticker of the No. 1 stock you must buy immediately. Learn more here... | 
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