Sunday , 21 July 2024

Deja Vu? Is Gold Just in a Correcting Phase on Its Way to Parabolic Peak of $4,294?

The current volatility in the precious metals market doesn’t necessarily indicate a change in secular direction. [In fact,] if today’s gold price was to rise by the same degree over the next 14 months [as it did from the beginning of 1979 into 1980, it would hit  $4294/ozt. by Jan 2013! Let me explain.] Words: 420

So says Plan B Economics ( in edited excerpts from his original article*.

Lorimer Wilson, editor of (A site for sore eyes and inquisitive minds) and (Your Key to Making Money!) has edited ([ ]), abridged (…) and reformatted (some sub-titles and bold/italics emphases) the article below for the sake of clarity and brevity to ensure a fast and easy read. The report’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement.

 The article goes on to say, in part:

The following chart is a snapshot of gold prices during the 1970s. Between January 1971 and November 1978, gold experienced a number of whopping corrections that sent the weak hands scrambling to cash. Many levered players saw their margins decimated and called it quits…

What many at the time failed to realize was that the great bull market in gold had only just begun. Below, I have extended the above chart by only 14 months to include the full extent of the 1970’s bull market (shaded correction periods remain the same to provide context). The additional data encompasses one of the greatest performances gold has ever seen (intra-month data would have yielded even better results, as it would have included the full extent of gold’s rise). The final 14 month 252% rise was the epitome of a parabolic frenzy that every investor dreams of exploiting.

Investors that bailed during one of gold’s many heart-pounding corrections entirely missed the biggest leg of the 1970’s bull market. To put this into perspective, if gold were to rise by the same degree over the next 14 months [from its recent low of $1,700/ozt.] , it would hit [$4,294/ozt.] by Jan 2013. [Using a base price of $1,750 would equate to a future parabolic peak of $4,421/ozt.]

I’m not making a prediction but what I am saying is that heightened volatility and steep corrections don’t necessarily indicate the end of a bull market. In fact, some might argue that scary volatility, by shaking out the weak longs, helps form a base from which a big bull market can rise.

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