Gold bottomed in December 2015 and momentum has been shifting to the upside since then, with gold’s overall direction being up. But a multi-year resistance at $1365 has been very strong suggesting the mega trend in gold has not yet shifted to bullish, suggests Omar Ayales, commodity expert and editor of Gold Charts R Us.
Interestingly, 2018 was a very telling year given the fueling of deflationary concerns over trade skirmishes between the U.S. and China. Remember, deflationary fear is what pushed gold into a bear market back in 2013.
However, gold held above $1200 as buyers flocked in whenever this level was tested thereby showing strong support. Today, deflationary concerns over trade wars are subsiding and the worst seems to have been priced into gold, resources and other assets leaving the upside as the most viable direction for the gold universe.
Not only that, a plethora of political and geopolitical uncertainties is also supportive of higher gold. Gold is poised to test its key resistance level at $1365 as 2019 gets underway. A break above this level could shift gold’s mega trend to the upside with handsome upside potential.
But although gold itself is a great investment for 2019, I prefer to invest in the gold mines. They tend to move up with gold. Moreover, they’re grossly undervalued compared to gold and thereby offer the best upside potential.
One of the companies we like the most is B2GOLD (BTG). It’s a mid-tier company that’s quickly becoming one of the largest producers. It has great management, great assets and it’s one of the gold mines with a healthy balance sheet, sitting on a bunch of cash.
Technically, the stock is just breaking above a sideways consolidation band showing upside potential. We bought near $2.60 during the consolidation (and riskier) phase. However, buying below $2.85 is a great opportunity. Our upside target for the first quarter of 2019 is $3.25, an approximate 20% increase.