Gold is now under pressure after its recent rise, but the current cycle will see it go much higher, said Nick Santiago of InTheMoneyStocks.
With gold recently at never-before-seen price levels, what’s next for the yellow metal?
Nick Santiago, chief market strategist at InTheMoneyStocks, said that while gold could dip lower in the near term, the current cycle will see it rise much higher.
“I think this is the tip of the iceberg in (gold’s) run longer term. In the short run we are very extended, very overbought — I would not be a buyer of gold here at this level, I’d wait for a pullback,” he said.
Santiago was speaking last Thursday (August 6), when the gold price was at around US$2,050 per ounce. Since then it has corrected below US$2,000, nearly hitting US$1,900 on Tuesday (August 11).
In terms of how he’s playing gold right now, Santiago said it’s important for investors to understand why they want to own the yellow metal. For him, physical gold is important as an insurance policy. But for trading purposes he uses vehicles such as exchange-traded funds and futures.
Santiago has a focus on charts and technical analysis, and during the interview he also discussed silver and the next key price levels for the white metal. He noted that US$26 per ounce, a point silver passed last week, was important and said that US$30 and US$34 are also key areas to watch.
“I like silver a lot better than I like gold right now, just because it’s trying to catch up to gold,” he said, referencing the gold/silver ratio, which is a calculation of how much silver it takes to buy an ounce of gold. The ratio is currently at 80:1, and Santiago noted that it usually halts at 60:1 — “right now that brings you to around US$34, US$35 (for silver).”
In closing, he encouraged investors to be cautious even during these exciting times, emphasizing that they should familiarize themselves with charts and patterns.
“Don’t take it for granted, this is not child’s play, this is not an easy business. There’s a lot of risk in this business, it’s a dangerous business and you really need to know what you’re doing.”
Watch the interview above for more from Santiago on gold, silver and technical trading.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.