The outlook is extremely positive right now and we believe it represents one of the best long  term investment opportunities. There are enough macro indicators which support the case for  investment into gold and we have pointed out many such factors in our previous macro insights  and outlook reports. However, this macro insight is dedicated to the technical aspects of gold as  an asset class. We would want to draw your attention to how tremendously under-invested gold  is at the moment. The gold ETF holdings are at their lowest in more than four years and have  seen redemptions in gold ETF to the extent of almost 30% from the peak made in 2020. We have  had net redemptions for 8 consecutive quarters which has never happened before in history. The  highest number of quarters before this was 4 in 2013 followed by 3 in 2015.

The chart above shows how these periods presented a great short term to long term opportunity  to buy gold. In fact, the multi-year low of USD 1032 per troy ounce was made in December 2015  which was at the end of one such period. Now with 8 consecutive quarters of net redemptions we feel gold is about to take off and we expect it to reach 2400 levels by year end and a level of  5000 plus by 2027.

Apart from the gold ETF, we can see from the chart below that the open interest in gold is also  extremely low. Whenever the open interest has been this low in last few years, we have seen a  rally in gold price soon after. We see the history repeating itself this around as well.

The charts below show how gold has severely underperformed equities as an asset class over the  last few decades. We see the Gold/S&P500 ratio going up from its current abyss in a big way  over the next few years. This could be accentuated with gold prices going up and with equities  going into a bear market which is also our macro call for the next 3-4 years. However, equities  going down is not a pre-condition for gold to go up. Some of the many stunning gold rallies have  happened in an equity-bullish macro drop like in 2001-2008. At the same time some of the  breath-taking rallies have happened during an equity bear market like in 1973-1979.

Conclusion 

Gold is at the cusp of a multi-year bull run that could see it going up 2.5-3 times over the next  few years. All the global macro-fundamental factors are pointing towards the stunning potential  of this asset class over the next few years and all our technical indicators tell us that this may be  about to take off very soon. So, it’s probably time to get on board and sit tight.