Gold & Silver

You have no doubt read countless articles on the price of gold costing “x dollars per ounce” and possibly own a gold ring or some other piece of gold jewellery but do you really understand exactly what you are buying? What’s the difference between 1 troy ounce of gold and 1 (regular) ounce? What’s the difference between 18 and 10 karat gold? Let me explain. Words: 637

Some person once said somemthing like, "Shoot for the Moon, and if you miss, grab a star on your way down." One of the biggest mistakes that I think investors, technical analysists, and chartists make is getting too much tunnel vision in terms of short-term charts, short-term price, and short-term ideas. Jim Sinclair once said that, "To make big money, one must take big risk." In doing so, he was suggesting that one should take big risk at times, but with a SMALL amount of money- NOT betting the farm. Personally, I think that today is one of those times in the Gold, Silver, and Gold/ Silver Stocks. Of course, the amount of "risk you take" is really only a function of how well you have done your homework, most of the time.

Below, is a chart of Gold with all kinds of lines rising in what appears to be an envelope with the price of Gold generally riding along the top. The lines are "moving averages" that show how the price of Gold is rising "on average" over different periods of time. Only a SuperBull Gold parabolic move in price keeps the price of Gold rising along the top of the moving average envelope like cream floating on top. The price of Gold is almost always moving higher in the SuperGold Bull so we see the moving average envelope constantly rise from the lower left of the chart, up to the upper right.

Just look at Gold’s move, already, though. So many “experts” from banks and brokerages have trotted across the stage on television telling us that “Gold is an old investment relic that pays NO DIVIDENDS!” So what? Gold has risen up over 700% for massive gains since 2001. How many of these $#$$&&^%^&^&^’s have achieved that kind of performance since 2001, besides NONE? Can you imagine the percentage gains if Gold explodes higher to double the log channel in blue from here? Quit watching TV and start thinking for yourself! And, BTW, per the 70’s Gold Bull, a huge move up from here would NOT be the final move up in this Historic Gold Bull.

With Lorimer Wilson away for a couple more weeks "researching the Chinese Economy", I think we can probably try something a bit different. If any readers have a question about a chart in the Precious Metals Sector that they would like to send to me, I should have time to pick out a few questions to do my best to answer.

The Gold Bull grows into a parabolic form on the arithmetic chart, going higher in price per time along the way. Thus each wave higher is “longer in price” while taking less time to play out. The Gold parabolic move is created by the parabolic increase in Dollars being printed.

The 73 week exponential Moving average shown on the chart in red is the kind of simple indicator that can give the long-term investor the confidence to invest/ stay invested in Gold. We can see on the chart that since the inception of the Gold Bull Market down at the “Entry for Gold Bull” label, Gold has only briefly fallen below the RED LINE 2 times.

The concept of “value” is extremely important, especially when Dollars are being printed aggressively. This is because the value of your Dollars is falling. Most people look at a Dollar and see a Dollar. They don’t understand that the worth of a Dollar can fall dramatically in times like today.

Several years, ago, the very savvy Richard Russell stated that the investment times were changing. He said that with huge debts everywhere, cash flow would be the most important issue for everybody going forward- for business, for investment, and for everyday life. He said that it was no longer a game of “Return on Capital”, but a need for “Return of Capital.” What Richard was saying was that good and consistent investment and income gains would be more difficult for a decade, or so, and that just keeping the same value of one’s savings would be an important goal.

The Fractal Gold chart work is a direct comparison of Gold, today, to the late 70’s Gold Parabola. Thus, “timing” is taken directly from the late 70’s cycle, with price targets created from a combination of the late 70’s Gold price and different technical analysis techniques. We developed a price target back in 2006/ 2007 for Gold to reach the $10,000 to $12,000 range during this Gold Bull. Anything above that range would mean that the “Stagflation” comparison to the late 70’s was exceeded and “Hyper-inflation” would become a real possibility. Let me explain where we are at this point in time.