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I saw an article recently that says that gold’s going to $5,000…[based on] the Fed easing its interest rate raising cycle…History proves this to be an absolutely false hope….
So says Avi Gilburt, in an article severely edited ([ ]) and abridged (…) here by the editor of munKNEE.com – Your KEY To Making Money – for the sake of clarity and brevity to ensure a faster and easier read.
Implications of An Easing Cycle By the FED
For those of you that have invested in the metals markets over the last several decades, you may remember that the Fed was full into an easing cycle as we moved into the 2010’s and it made everyone, including their mother, grandmother, and grandmother’s dog believe that gold was about to skyrocket on that action….On August 22nd, 2011, I penned my first public article on gold in which I summarized my expectation at the end of the article saying: “Since we are most probably in the final stages of this parabolic fifth wave “blow-off-top,” I would seriously consider anything approaching the $1,915 level to be a potential target for a top at this time.” As we now know, gold topped within $6 of the target I had set the month before, and then bottomed to within $50 of the target I had set years before…[of somewhere in the] $750-$1,000 range.
…[Bottom line;] gold dropped almost $900 during that Fed easing cycle. Not only was it an interest rate easing cycle, but the Fed was even actively engaged in something called Quantitative Easing…so, based upon history, will it be an easing cycle…[that will cause gold] to rally to $5,000 “soon?” I think not. Now, do I believe that gold will be going to $5,000, $10,000, or even $25,000? (Read: 90 Analysts Now Forecast Gold Going To $3,000 & Beyond!) Yes… but that is based upon a 50+ year cycle. Not “soon.”
My near-term expectations
…My near-term expectations…[are] for gold to rally to the $2,428 region…over the coming several years yet, if we see very strong extensions, it could even take us to the $2,700 region. However, once that rally completes, we will likely see another multi-year correction take hold in the gold market, which will ultimately set up the next major rally a decade or so from now.
For those of you that are questioning how I have been able to identity the turning points in gold so accurately through the years, well, it is because I recognize that sentiment is what truly drives the gold market and, I am able to gauge sentiment using Fibonacci Mathematics as applied through Elliott Wave analysis. It has provided me with the accurate topping call in 2011, as well as the accurate bottoming call in late 2015 – in addition to many other minor turning points throughout.
A Testamonial
Doug Eberhardt, an author/analyst on metals…and a gold dealer…[from whom I] have done my more recent buying…was astounded by the accuracy of our analysis and made the following public pronouncements about our accuracy in the metals world, based upon our Elliott Wave analysis:
- “I can attest to your accuracy on actually buying both gold and silver from us as close to the bottom as one could. With gold you called it to the letter and your limit order, which was placed well in advance, executed perfectly. The silver limit orders were within a tight range of the lows as well . . . Your timing on buying the dips is uncanny Avi! People should be aware of this….You have the magic touch. [If investors had listened to you they would have bought] the metals before the premiums shot up and before everyone ran out of product. This was the 2nd time you have done this so kudos to you for doing that for.”
My Conclusion
I can assure you that if you are waiting for the Fed easing cycle, or inflation, manipulation, or the myriad of other reasons that are pronounced throughout the media as to what drives gold, you are looking in the wrong place. Sentiment, my friends, is what drives gold up and down!