Not many asset classes performed well in 2018, but gold managed to escape with only about a 1% loss — and the charts tell me it could shine even more brightly in 2019.
After all, a 1% drop for 2018 was actually pretty decent considering the fact that gold had a massive swoon over the summer, down more than 10% at one point. And remember that many other asset classes did even worse.
Cash was 2018’s big winner as equities and bonds took it on the chin. Even commodities were down (the strong dollar probably a reason among others). Oil slid hard over the last few months
The weekly chart of gold is fairly constructive here. It’s been “sleepy” — just creeping higher on very little news — but gold could have a big year if the dollar starts to decline.
The technical picture is solid, but moderately overbought. Yes, we could see a bit of a pullback in the SPDR Gold Shares ETF ( GLD) back to the $119 area, but then it could launch a nice run higher. Ultimately we could see this ETF move toward its highs in 2018 around the $129 area.
I like the recent turnover when gold was a bit lower, indicating more institutional sponsorship. The SPDR Gold Shares ETF is above 50- and 200-week moving averages, important levels for long-term holders of gold.
Add it all up and I see GLD making a big move in 2019 and outperforming most asset classes, as this chart shows:
(This column originally appeared at 7:30 a.m. ET on Real Money, our premium site for active traders. )