The prospects look great for Gold and Silver to move sharply higher into 2013 to mimic the moves made in the 2005/ 2006 period and especially in 1979. In both cases back then the PM Stock Indices made big runs along with Gold and Silver. As such, the current HUI looks good for a major bottom to now be in place and to mimic the PM Stock Surrogate chart from the late 70’s. This would see the HUI go as high as the 1000 area in 2013. Let me explain further. Words: 640
So says Goldrunner (www.GoldrunnerFractalAnalysis.com) in edited excerpts from his most recent newsletter to subscribers posted here with permission.
Goldrunner offers a subscription service which provides detailed technical analysis of where the price of gold, silver and precious metal stocks are going in each stage of their respective bull runs. This service comes with detailed charting based on conventional technical analysis and our proprietary fractal analysis based on the ’70s.
Below are some of the latest comments from Goldrunner with his rationale for expected price movements in precious metals stocks (without illustative charts which are only available to subscribers).
- Gold [Read: Goldrunner: Gold’s Extremely Bullish Backdrop Setting Stage for Run to $2,050, Then $2,400, Then $4,500 and Ultimately $10,000-12,000! and 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 now
- Precious Metals mining stocks.)
Lorimer Wilson, editor of 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.
Below are snippets of what Goldrunner had to say in a recent mailing to subscribers.
The reasons for big potential moves in the PM Stocks are many:
1) The paper currency printing world-wide has been huge with massive needs for debt monetization going forward. This creates extremely low interest rates which forces investors to consider the huge potential for the value of Gold and Silver, and for the PM Stocks that own large reserves of each. The PM Sector is the only game left in town.
2) During the rush of debt monetization, the Fed has talked down inflation in an attempt to keep oil prices low due to the stagnant economy. This helps to keep costs for Gold and Silver producers relatively low.
3) The flood of paper gold has been used to keep the price of Gold and Silver relatively low since pricing is based on the paper markets. In reality, the Fed and other Central Banks need a much, much higher price of Gold going forward [Read:Governments Will Want – Will NEED – Much Higher Gold Prices! Here’s Why] as the paper currencies are devalued against Gold to balance the budgets of the various nations. The timing window for Gold to bust a parabolic move fits the 1979 period where Gold shot higher to double the log channel while Silver made a series of huge moves to the parabolic end of the late 70’s Gold Bull.
4) A lot has been said about the hedge funds shorting the PM Stocks while going long Gold and Silver. The charts from the late 70’s for the PM Stocks look like twins of today so the same shorting of the PM Stocks occurred back then, too. We know that from this point forward, the PM Stocks made huge moves up into the end of the PM Bull [Read:We Are Certain Gold Producers Will Soar – Here’s Why].
5) It is all about timing….The Fed and friends threw everything they needed to at the PM Sector up until now, just like the late 70’s but, now, it is time for Gold, Silver, and the PM Stocks to rip higher to catch up to the fundamentals. [read: Goldrunner: Gold’s Extremely Bullish Backdrop Setting Stage for Run to $2,050, Then $2,400, Then $4,500 and Ultimately $10,000-12,000!]
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6) As Jim Sinclair stated many years, ago, it will be the same group that has tried to keep the price of Gold under control that will take Gold up violently [Read:Alf Field: Gold STILL Targeted to Reach $4,500 – Preceded By Violent Upside Action]. Thus, the parabolic moves we saw in Gold, Silver, and the PM Stocks in the late 70’s will again occur with the wind of the Fed and its honchos at the backs of Gold, Silver, and the PM Stocks.
7) The most important change that should start to take effect to launch the PM Stocks should be the beginning of an aggressive rise in Gold and Silver resource valuations in the ground as Gold and Silver go parabolic [Read: Goldrunner: Gold’s Extremely Bullish Backdrop Setting Stage for Run to $2,050, Then $2,400, Then $4,500 and Ultimately $10,000-12,000!]. That is the one thing that all types of Gold and Silver companies have in common, and resource valuations in the ground took flight as Gold and Silver took flight in the next parabolic wave higher in the late 70’s.
8) Different subsectors of the PM Stock universe will move somewhat differently from here, forward, with the explorer class making the biggest gains in the very last parabolic wave up yet practically all PM Stocks will be making large gains going forward if the late 70’s is a guide….
Given what we expect gold and silver to do in 2013, we can expect the HUI to mimic what the PM Stock Surrogate chart did in 1979….[in which case] the HUI might run as high as the 1,000 area while Gold doubles in price….
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.
Our subscription service provides detailed technical analysis of where the price of gold, silver and precious metal stocks are going short term (in the next week or two), intermediate term (within the next 3-6 months) and long term (the ultimate top) in each stage of their respective bull runs. This service comes with detailed charting based on conventional technical analysis and our proprietary fractal analysis based on the ’70s. Below are some of our latest comments and rationale for expected price movements in gold without illustative charts which are only available to subscribers. Words: 1000
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
That governments will want – and will NEED – much, much higher gold and silver prices in the future is counter intuitive, given that they have done everything within their power to throttle back and to keep a lid on bullion prices. Let me explain why. Words: 1300
We now have a really strong probability that the correction which started at $1913 on 23 August 2011 has been completed both in terms of Elliott waves and also in terms of time elapsed. If this is correct, the gold price should soon be expressing itself in violent upside action as it moves into the third of third wave which is still targeted to reach $4,500. [Let me explain in detail (with charts) how and why my most recent analyses confirm my earlier target of $4,500.] Words: 1085
For the past eighteen months, gold stocks have been pummeled…What’s going to move these darn stocks? Will their day ever come? Could our research – gulp – be wrong? Jokes have even started circulating…[such as] a) What’s the difference between a seagull and a gold stock investor? The seagull can still make a deposit on a Mercedes. b) Gold equities may be bad, but I slept like a baby last night. I woke up every hour and cried. Laugh or cry, however, underneath this heap of stock-certificate debris is the contrarian opportunity of a lifetime. That’s a strong statement, I know, but below I present numerous well-researched reasons why I’m convinced gold stocks are one spark away from igniting the portfolios of those with the cash to buy, courage to act, and patience to hold. Words: 2800
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!