Advertise | Bookmark | Contact Us | E-Mail List |  | Update Page | UraniumSeek.com 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page 

 GoldSeek.com >> News >> Story  Disclaimer 
 
Latest Headlines

Gold Seeker Weekly Wrap-Up: Gold and Silver Gain Over 1% and 2% on the Week
By: Chris Mullen, Gold Seeker Report

Ira Epstein's Metals Video 11 17 2017
By: Ira Epstein

Next-Generation Crazy: The Fed Plans For The Coming Recession
By: John Rubino

COT Gold, Silver and US Dollar Index Report - November 17, 2017
By: GoldSeek.com

Gold Miners’ Q3’17 Fundamentals
By: Adam Hamilton, CPA

Bonfire of the Absurdities
By: John Mauldin

The Social Security Inflation Lag Calendar - Partial Indexing Part 1
By: Daniel R. Amerman, CFA

Rob From The Middle Class Economics
By: Gary Christenson

GoldSeek Radio Nugget: John Williams and Chris Waltzek
By: radio.GoldSeek.com

The Metals Market Is A Mess And Will Likely Continue To Frustrate You
By: Avi Gilburt

 
Search

GoldSeek Web

 
Gold and Silver: Boom or Bust?


 -- Published: Thursday, 6 April 2017 | Print  | Disqus 

By Hubert Moolman

 

Gold and silver prices are at a critical point. It appears that we will see massive price movements up or down, soon. Conditions are very similar to that of the early 80s (circa 1983), for example, when the Dow had just made a significant breakout, after a 17-year consolidation. See below, a long term chart for the Dow (generated at tradingview.com):

 

http://goldseek.com/news/2017/4-6hm/image002.jpg

 

In 1966, the Dow made an all-time while the Dow/Gold ratio peaked. It took about 17 years from that peak (1966 to 1983), for price to break sufficiently higher than that 1966 – level. Furthermore, about three years before the breakout, the gold price made a significant all-time high (in 1980).

 

The Dow eventually went higher over the next years, to multiples of the breakout level.

 

Today, the Dow recently (at the beginning of 2017) made a significant breakout from a resistance line that has been in place for about 17 years since the Dow/Gold ratio, and the Dow (at that time) made an all-time high. In a similar manner, to the 1983 scenario, gold made a significant all-time high years (about 5 years) before.

 

Now, just like in 1983, the feeling is that the Dow will continue to rise much higher than current levels. Due to this similarity, many are calling for a new bull market in stocks, taking the Dow to even greater highs, like 40 000 and beyond. Although it is understandable why they feel so; it is more likely to end in great despair for those stock market bulls.

 

There are just too many obstacles for a new bull market in stocks, with the major one being the all-time high debt levels. However, I will not go into detail about this in this article, since I would like to focus on gold and silver.

 

The similarities to 1983 are also reflected in the gold and silver charts, and this highlights the dilemma that these metals find themselves in. Below is a long term chart for gold:

 

http://goldseek.com/news/2017/4-6hm/image004.jpg

 

I have marked two patterns 1 to 5, to show how they might be similar. The comparison is very plausible, especially given the fact that the Dow is currently in a similar position, as explained above.

 

If the comparison with the 1980s pattern is justified, and the current pattern continues in a similar fashion, then gold will continue in a long bear market. However, there are just too many fundamental obstacles to such a scenario, since gold appears to be ready for the next phase of the bull market which started around 2000.

 

From a technical perspective, price is currently at a critical point, which could show whether we will have the expected bull market, or the very unlikely bear market. A breakout at the top red line (the high at point 5) would almost certainly signal or confirm the bull market. This would be divergence from the 1980s pattern, and likely cause prices to rise really fast once the breakout is confirmed.

 

This, in my opinion, is the most likely outcome.

 

A breakdown at the bottom red line, could mean that prices could continue to follow the 1980s pattern, and go lower than $1000.

 

Below is a long term chart for silver:

 

http://goldseek.com/news/2017/4-6hm/image006.jpg

 

I have marked two patterns 1 to 5, to show how they might be similar. The comparison is very plausible, especially given the fact that the Dow is currently in a similar position, as explained above.

 

If the comparison with the 1980s pattern is justified, and the current pattern continues in a similar fashion, then silver will continue in a long bear market. However, there are just too many fundamental obstacles to such a scenario, since silver appears to be ready for the next phase of the bull market which started around 2001.

 

From a technical perspective, price is currently at a critical point, which could show whether we will have the expected bull market, or the very unlikely bear market.

 

A breakout at the top red line (the high at point 5) would almost certainly signal or confirm the bull market. This would be divergence from the 1980s pattern, and likely cause prices to rise really fast, once the breakout is confirmed.

 

This, in my opinion, is the most likely outcome.

 

A breakdown at the bottom red line, could mean that prices could continue to follow the 1980s pattern, and go much lower than point 4.

 

A major fundamental reason why the current scenario for gold and silver will not play out like it did in the 80s, is the massive debt levels combined with the interest rate cycle which appears to have turned (with higher interest rates coming).

 

Below, are the same gold and silver charts compared to interest rates:

 

http://goldseek.com/news/2017/4-6hm/image008.jpg

 

http://goldseek.com/news/2017/4-6hm/image010.jpg

 

On both charts, one can see that around 1983, interest rates were close to all-time highs, and had just turned(1981) to trend lower (from a long-term perspective) over the next years. This created positive conditions for general stocks, and adverse conditions for silver and gold.

 

Currently, interest rates are close to all-time lows, and appear to have turned, with higher interest rates coming. This will create adverse conditions for general stocks, and very positive conditions for silver and gold.

 

For more on this and this kind of fractal analysis, you are welcome to subscribe to my premium service. I have also recently completed a Silver Fractal Analysis Report as well as a Gold Fractal Analysis Report.

Warm regards,

Hubert

 


| Digg This Article
 -- Published: Thursday, 6 April 2017 | E-Mail  | Print  | Source: GoldSeek.com

comments powered by Disqus



 



Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to GoldSeek.com

 news.goldseek.com >> Story

E-mail Page  | Print  | Disclaimer 


© 1995 - 2017



GoldSeek.com Supports Kiva.org

© GoldSeek.com, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of GoldSeek.com 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 GoldSeek.com. 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 GoldSeek.com, its affiliates or advertisers. GoldSeek.com 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 GoldSeek.com, is strictly prohibited. In no event shall GoldSeek.com or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.