Having long believed the seven-year-old has the ability to feature in a Gold Cup, the Andoversford trainer will tailor his next campaign to culminate in the Festival showpiece.
After running out the winner of a Listed chase at Ascot on his comeback in November, Vinndication finished a respectable fourth under top-weight in the Ultima Handicap Chase at the Cheltenham Festival.
Bailey said: "I've always believed he has the potential to be a Gold Cup horse in time, and I'm not changing my mind now. He is still a young horse, and I'm sure there is further improvement.
"He ran an absolute stormer (at Cheltenham) for a horse that hadn't run since November - and it put to bed the idea he can only run right-handed.
"He will be hard pushed to run in handicaps next season, but we kept him to them this season because we felt he was still handicapped to win races in them.
"We will have to look at better races next season, and it would be lovely if we were able to do that and get to the Gold Cup."
While Bailey was satisfied with Vinndication's latest effort in defeat, he believes the result could have been even better had he been able to get a racecourse gallop into him.
He added: "He could have had a second run at Ascot before Christmas, but he had that stone bruise - it was probably a blessing in disguise because it gave him a bit more time to strengthen up.
"I had hoped to do a racecourse gallop at Newbury - which we weren't able to do. He was only beaten three lengths, and that may have made the difference.
"He was fit as a flea at home, but there is nothing better than match practice."
Bailey has been forced to re-think future plans with Imperial Aura, after the seven-year-old was hit with a 14lb hike to a mark of 157 following his victory at the Festival in the Northern Trust Company Novices' Handicap Chase.
He said: "It was a great result, because it is not often you plan a campaign and it comes right on the day. I've watched the replay so many times that my assistant Mat Nicholls has said, 'if you watch it again you might get beat!'.
"We definitely don't have any chance of thinking about going back to Cheltenham for one of those good handicaps - they are out of the question now.
"At the moment, I couldn't tell you what we are going to do."
Although plans for Imperial Aura may remain fluid, Bailey has hinted a return to three miles could be on the cards at some point.
He said: "I think he is a very good horse that still has a bit of further improvement - but he needs to, because we are going into a different league.
"I do believe he will get three miles. He won over it at Fakenham, but that wasn't really a race; then he didn't really finish off over it at Cheltenham, but that was only his second run over fences."
The Gold Cup-winning trainer is convinced Newtide can leave behind his first defeat over fences, when a distant last of six finishers in the National Hunt Chase, by progressing into a contender in next season's Coral Welsh Grand National.
He said: "The whole way round it looked like he was going to hack up, but I think he is still a bit of a big baby and that he wasn't physically strong enough to cope with it - plus it was only his third runs over fences.
"I really do believe he will get those staying trips - and I hope he will be one for the Welsh Grand National next season, because he loves soft ground."