Insights/Precious Metals
Precious MetalsApril 2026 · 6 min read

The Gold 200-Day Moving Average: A $100K to $10M Strategy

Return

+665%

Win Rate

22%

Trades

102

Sharpe

0.29

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The Thesis

The 200-day moving average is the most widely watched technical level in all of finance. When gold is above it, the long-term trend is up. When below, it's down.

The Strategy

Entry: Buy gold when price crosses above the 200-day SMA

Exit: Sell when price crosses below the 200-day SMA

Why 22% Win Rate Still Makes Money

The win rate is only 22% — meaning 78% of trades are losers. So how does it return +665%?

The answer: asymmetric payoffs. The average winning trade is massive (multi-month gold rally), while the average losing trade is tiny (small whipsaw). A few monster moves pay for all the small losses:

  • The 2005–2011 gold bull market: one trade, +200%
  • The 2019–2020 rally: +40%
  • The 2024–2026 rally: +80%+

    • Academic Evidence

  • **Meb Faber's research** showed $100,000 growing to over $10 million using this system from 1971–2021
  • **AQR Capital** found trend-following across commodities produces consistent returns for over 100 years

    • Key Insight

    Low win rate ≠ bad strategy. What matters is the ratio of average win to average loss.

    Try this strategy yourself

    Clone it, modify the parameters, and backtest against 25 years of data

    Open in Strategy Builder← More Insights

    Backtested results are hypothetical. Past performance does not guarantee future results. Not financial advice.