Gold and Silver should see final bottoms in price this week. The upside potential following this correction still looks huge for Gold and for Silver. We expect Gold and Silver to soon make a run back up to the recent highs – but at a sharper angle than they fell. [Let me explain why this will likely be the case.] Words: 528
So says Goldrunner (www.GoldrunnerFractalAnalysis.com) in edited excerpts from his most recent newsletter to subscribers posted here with permission.
Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) and www.munKNEE.com (Your Key to Making Money!), has edited the article below for length and clarity – see Editor’s Note at the bottom of the page. This paragraph must be included in any article re-posting to avoid copyright infringement.
Goldrunner goes on to say, in part:
(Go here to subscribe to his service for indepth proprietary fractal analysis and charts, charts, charts supporting his future price projections for Gold [Goldrunner: Price Target of $10,000 to $12,000 for Gold Still Holds] and Silver [Goldrunner: Silver to Rocket to $60 – $68 and Then Much Higher and Precious Metals mining stocks.)
- Seasonal strength appears for Gold and for Silver into late October.
- Gold has now traded down to the 20 week EMA which has generally held support for most of the impulsive runs over the last 3 years. We’d expect any further weakness to be reversed rather quickly so it looks like the correction is very close to being complete.
- Per the 3 fan-line Models, we’d expect Gold (and Silver) to shortly resume their intermediate-term momentum moves higher with a vengeance.
- The Precious Metals Stocks have shown good relative strength while Gold and Silver have corrected. This suggests that the PM Stocks will participate nicely as Gold and for Silver move higher. Individual PM Stocks that have outperformed in the last run should lead the pack.
NOTE: A link to the Goldrunner subscription service can be found here. If you would like to be added to Goldrunner’s mailing list to receive his new and Free newsletter, Goldrunner’s Fractal Corner, send an e-mail to [email protected] .
The upside potential following this correction still looks huge for Gold and for Silver.
- Gold has hit the middle Keltner Channel line like it did in 2005 for an important bottom.
- The expected upside price moves from this bottom for Gold are very similar on the 2005 fractal chart, the late 70’s fractal chart, the seasonal chart, and on the 3 fan-line Model.
Given the above, I expect
- A final bottom for Gold this week followed by a pretty aggressive move back to the recent highs.
- After that Gold will likely seek new highs around the $2050 area, followed by a chop higher through angled resistance to around $2350.
With Gold’s fundamentals so strong, and getting stronger, this week’s paper gold technical trade low could easily act like a rubber band – snapping back. Once up through the top of the log channel, Gold should fly.
- We should also see a final bottom for Silver this week.
- The move might be up to $40.5 to $41.5 with a spike a bit higher.
- Above $44 to $45 Silver will have only angled chart resistance left.
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For Precious Metal Stocks
The outlook for the PM Sector looks great going forward. The government’s inability to pay its bills, along with the weak economy, guarantees massive Dollar printing thus the PM Sector remains a major insurance policy going forward.
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The PM Sector, at this juncture in the historic cycle, becomes an avenue to protect the purchasing power of your investments. It also becomes mostly a one lane road to higher pricing while many other asset classes fair more poorly. This creates the potential to protect your savings while the PM Sector runs vastly higher, and then pick a spot to start to move part of your PM Investment gains into other asset classes that will eventually recover.
Editor’s Note: The above post may have been edited ([ ]), abridged (…), and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.
My 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 and we still stand by that forecast. Let me explain where we are at this point in time.
Personally, based on the fundamentals at hand and the fact that Gold doubled its log channel around this point in the cycle; I expect Silver to bust up out of its log channel in 2013. Initially, I look for Silver to reach the $60 to $68 level, first and hold open the possibility for Silver to do much more on the upside as the 70’s Silver Chart reflects.
Jim Sinclair’s comment- “This line is no line in sand, but rather it is an event horizon that every reader should print out and paste on the wall behind their trading platform. However they will not. In the heat of emotion the gold community will be selling their children to buy gold as it over runs $4500.”
1) Yet, VALUE is different things in different parts of the long-term cycle.
2) This is because VALUE IS “SEEN” IN DIFFERENT ASSET CLASSES at different points in the cycle depending on how money printing and interest rates affect different parts of the economy.
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.
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
The “Deflationary” portion of the long-term economic cycle is called Kondratieff Winter. It is characterized by huge debts with a topping economy and stock market. We hit the K-Wave Winter in 1929, and again in the year 2000. The most important factor in how things play out in a K-Winter is the “state of the Dollar.”
Greenspan orchestrated massive asset price inflation in the face of K-Winter Deflation by aggressively printing and devaluing the US Dollar. Many look to see “where the Dollars are going”, but it is the effect of Dollar Devaluation on Price Inflation that is most important. The Dollar Devaluation will grossly devalue the debts while driving key asset prices like Gold sharply, higher.
This period of the long-term investing cycle is all about reality versus fantasy, but on several different levels. The system has been turned upside down by using “paper derivatives” that can be expanded to infinity for “price discovery.” Even paper money is a “derivative” since periodically in the long-term cycle, like today, the world must turn to REAL MONEY GOLD to bail out the paper currency system.
Since the Fed has the control of the money, it knows in advance what it will do. Thus, the Fed Banks have very powerful legal inside information and can front-run everything that they do while taking no risk, whatsoever!