U.S. Markets open in 2 hrs 6 mins

Is It Too Late To Chase Gold After 20% Pop?


No one wants to be late to the best party in town, which in investment circles, has been gold for the past two months.

After nearly two years of selling, derision and outright mockery, the precious metal has staged a mini-comeback, surging by more than $200 an ounce, or 20%, to get back above $1,400 once again.

Related: 'Spectacular' Gold Rally Is Coming: Schiff

And now, with fear and geopolitical tensions both on the rise again, investors everywhere are wondering if they've missed the bus on a reliable safe haven or if there's more to go.

"If you've been in it the whole time, clearly do not sell right here," says Ryan Detrick, senior technical strategist at Schaeffer's Investment research in the attached video. "Maybe dip your toe in," he adds, "but the fact that it has rallied so much and everyone is getting a little excited make me get a little bit dicey here."

Related: Gold: Wait for a Further Pullback, Says Najarian

Adding to his correction concerns is the fact that Schaeffer's research shows each big rally in gold has been back-filled, at least for a few months.

We did a study when gold is up twenty percent from its lows," he says. "We loo0ked since 1999, or the start of the gold bull market, and what we found, and it has only happened six times, is that one, three and six months later, gold is actually lower every time after a 20% rally from the lows."

To be fair, gold is still down about $500 or 25% from its record high of $1,917 in 2011, yet still considered to be in a long-term secular bull market given its huge rally from $200 to almost $2000 in the past 15 years.

"You probably should have been accumulating about 4 or 5 weeks ago," he says when "people were just throwing gold out the window" and sentiment polls were at nine-year lows in bullishness.

"We've had a very good rally. It's not a terrible thing to own now, but maybe it's gotten a little too frothy in the near term."

Conflicting that data is the fact that September is, hands down, the best month for gold since 1980, which makes the case for holding easy but does little to ease the minds of investors who want a safe place to hide out while the world sorts itself out.

More from Breakout:

Syria Crisis Could Send Oil Toward ’08 Highs: Schoenberger

5 Growth Stocks Poised to Profit in the Fourth Quarter: Fahmy

As Home Price Gains Slow, Embrace the Remodeling Boom: PIMCO’s Kiesel