I’ve watched markets and how they act for over 20 years now. All of that history has helped to give me an edge when investing in the financial markets.

For instance, many investors say that $1,900 per ounce was the ultimate top on the price of gold. However, if we pay attention, the market will tell us that this is not the case.

How does the market tell us? It tells us by going through a period of consolidation. Gold has consolidated in a sideways triangle (descending triangle) for right at a year now.

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Well, when any financial asset is “topping out,” it doesn’t consolidate anywhere near its highs. Instead it has a blow-off top and makes another failed stab at the highs and then sinks like a rock. That’s not what I’ve seen happen in the price of gold at all.

But those who don’t understand market patterns and the cycles that it goes through think that the pullback and range that has happened in gold is a sign of weakness. But actually it’s a sign of strength.

You see, any asset occasionally needs to tread water sideways for a bit to build a base from which to launch from. It’s actually a very healthy thing and keeps an asset from going parabolic into an unsustainable trend.

Also, it’s been normal for gold to go through long periods of consolidation before hitting new highs.

For instance, this happened going into 2008. Gold slumped into a range that bottomed in about eight to nine months and then hit fresh highs around 19 months from its peak (or 10 months after its lows).

This very same pattern happened in 2006. Gold bottomed about five months later, but ultimately took around 16 months to go on to new highs.

Both of these consolidations were followed by very “trendy” periods, where gold launched higher and seemed almost unstoppable. But that’s the kind of thing that routinely happens out of healthy, sideways consolidations.

Well, where gold stands now, it’s been within that descending triangle consolidation for about a year. Even within that consolidation there’s formed an even tighter consolidation known as a symmetrical triangle ever since last May.

This symmetrical triangle will break out within the next month or two to the upside. The chart pattern’s price target will push gold outside of the larger ascending triangle to the upside.

That larger pattern has a minimum price target of almost $2,000 an ounce.

So, in plain English, let me explain what the end result of all of this triangle mumbo jumbo is.

It means that within a couple of months a spike higher in gold will happen. That spike will be large enough to shake up the gold bears, who thought gold had topped out. As it begins to stop them out and margin call them out of their positions, it will unleash quite a bit of buying pressure on gold, which will eventually take it up to around the $2,000 mark, likely within the next 12 to 18 months.

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I believe we are at the bottom of gold’s range now and we’ll soon see it have mostly “up days” from hereon as it begins its ascent higher. As gold trades above $1,675 an ounce, we’ll see the upward ascent speed up quite a bit.

This will mystify many investors and have them scratching their heads because they’ve felt that gold was “dead in the water” for so long now. They won’t expect it to “come back to life” like that and they’ll wonder where all of this upside momentum has come from.

But you heard it here first. Well, technically, I said it first on CNBC on July 25. My part starts at around the 2:55 mark.

Enjoy!

About the Author: Sean Hyman
Sean Hyman is a member of the Moneynews Financial Brain Trust. Click Here to read more of his articles. He is also the editor of Ultimate Wealth Report. Discover more by Clicking Here Now.