Advertise | Bookmark | Contact Us | E-Mail List |  | Update Page | 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page >> News >> Story  Disclaimer 
Latest Headlines

SPX and Gold; Pivotal Points at Hand
By: Gary Tanashian

Gold Is Up Lately. Why Does It Feel So Disappointing?
By: John Rubino

U.S. Government Debt Bomb Much Higher Than Americans Realize
By: Steve St. Angelo

Taiga Optionee SSR Mining Commences Winter Drilling Program at Fisher Gold Project, Northern Saskatchewan
By: Taiga Gold Corp.

Asian Metals Market Update: Jan 18 2019
By: Chintan Karnani, Insignia Consultants

Gold Seeker Closing Report: Gold and Silver Edge Lower While Stocks Rise on Trade Talk
By: Chris Mullen, Gold Seeker Report

Ira Epstein's Metals Video 1 17 2019
By: Ira Epstein

Debt, Division, Dysfunction, and the March to National Bankruptcy
By: Stefan Gleason

Stock Market Volatility Reflects Systemic Instability
By: Dave Kranzler

Wyoming Legislators Want State to De-Risk Investments by Holding Gold and Silver
By: Jp Cortez


GoldSeek Web

Gold: 14 Years & Three Patterns

 -- Published: Tuesday, 11 March 2014 | Print  | Disqus 

By GE Christenson


Gold peaked in August of 2011 and fell erratically into December 2013.


Was that the end of the collapse, or is there more downside coming in gold prices?


Bearish Scenario:  Listen to the banks who are forecasting weak prices in 2014 and thereafter.  “Nothing to see here folks, the dollar has weakened drastically since 1971, gold sells for 30 times its 1971 price, but it’s all good.  Just move on and pretend…  Gold will drop below $1000 before you can say 2016 elections…”


I’m not a fan of:


·         The bearish gold scenario when decades of Federal Reserve “printing” and US government budget deficits have all but guaranteed continued destruction of the purchasing power of the dollar.

·         Belief that even though dollar debasement practices have accelerated since the 2008 crash, gold prices will fall because bankers say so.

·         Propaganda that gold is useless and that unbacked debt based fiat currencies are solid and stable.

·         Large High Frequency Trading companies that short the gold market, loudly proclaim that gold prices will fall, dump a huge number of paper contracts on the Comex, quietly cover their shorts after the gold price crash, book huge profits, and then reverse the process as they push prices up.  These traders are in the business of making profits so none of this is surprising.


Instead of listening to self-serving banker opinions, let’s examine the data.  The following chart shows monthly prices for gold since 2000.  Note that highs and lows as listed in the monthly data are slightly different from actual hourly highs and lows.  For this analysis over 14 years, the differences are immaterial.


This table shows the price and approximate number of years.





Low to High (years)

High to Low (years)

Low to Low (years)

High to High (years)








Apr. 2001







Apr. 2004







May 2005







Mar. 2008







Oct. 2008







Aug. 2011







Dec. 2013








Summary:  The price of gold bottomed in 2001, rallied for 3.0 years, fell for 1.1 years, rallied for 2.8 years, fell for 0.6 years, rallied for 2.8 years, and fell for 2.4 years.  Lows were about 4 years apart, highs were about 3.5 years apart, and the rallies lasted, on average, about 3 years.


Gold in December of 2013 had dropped to the lower logarithmic trend line after falling for 2.4 years.  The patterns suggest that the next move should be a rally that lasts approximately 3 years to new highs near the top of the trend channel well above $3,500. 


But there is more:  (If you distrust Technical Analysis, skip this section.)


1)    Gold prices made a double-bottom in June and December 2013 thereby indicating a successful test of the lows formed in June.

2)    The MACD – a technical indicator (first chart) which tracks the difference between two moving averages – registered a very low reading in December 2013.  Further, the moving averages in the indicator have turned up.  This is strongly supportive of the analysis that December marked a major low in gold prices.

3)    The TDI-Trade-Signal line – another technical indicator (first chart) - registered its lowest reading in 15 years at the June 2013 low and has also turned up.  This is another strong indication that gold bottomed in December.

4)    The RSI – Relative Strength Index – as shown on the second chart was at a 15 year low at the June 2013 gold price lows.  It has turned upward.

5)    The disparity index, which is simply the deviation between the monthly prices and the 12 month simple moving average (second chart), was at a 30 year low and flashing a buy signal after the June 2013 gold price lows.


For those who have no faith in technical analysis:


Consider this GEM – Gold Equilibrium Model (thanks to Nick Migliaccio for the name).  I summarized the model in this short article.  The model is based on three variables and calculates the equilibrium gold price with no reference to oscillators or technical indicators.  The GEM model projects a “fair” or equilibrium price for gold in March 2014 of approximately $1,580.  Gold prices, based on this long-term model, are currently low and are likely to move much higher over the next several years.  This long-term model produced an excellent statistical correlation with the smoothed price of gold over the 42 years from 1971 - 2013. 




1)    The GEM indicates that, over the next several years, gold prices are headed much higher.

2)    The chart of gold prices since the year 2000 (log scale) shows a “megaphone pattern” of higher lows and higher highs.  Currently the gold price is near the bottom of the exponentially up-trending pattern.

3)    Technical oscillators indicate important bottoms in June and December – at levels not seen in more than a decade.

4)    The disparity index shows that gold prices in June were well below the 12 month moving average.  Similarly daily and weekly prices were well below their moving averages.  Prices tend to regress to the mean – another indication that prices are likely to rise from the deep lows in June and December.

5)    Short term prices could rise or fall a little from here – I’m offering no opinion – but gold prices should be much higher in 2015 and 2016.

6)   Gold is for savings and investing, not trading.  Dollars buy groceries while gold buys safety, insurance and peace of mind.

7)    As Darryl Robert Schoon always says, “Buy gold, buy silver, have faith.”  It is good advice.


GE Christenson

The Deviant Investor

| Digg This Article
 -- Published: Tuesday, 11 March 2014 | E-Mail  | Print  | Source:

comments powered by Disqus


Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to >> Story

E-mail Page  | Print  | Disclaimer 

© 1995 - 2019 Supports

©, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer


The views contained here may not represent the views of, Gold Seek LLC, its affiliates or advertisers., Gold Seek LLC makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of, Gold Seek LLC, is strictly prohibited. In no event shall, Gold Seek LLC or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.