munKNEE.com Your Key to Making Money
UBS has warned that the seven-year cycle in equities is rolling over, we could see
a sharp 30% correction in stocks and that as per the headline of their ‘Technical Outlook 2016′, it is time to “buy gold”.
By Mark O’Byrne (goldcore.com)
Analysts Michael Riesner and Marc Müller believe the bear market that has dominated the price of gold since 2011 is nearing a bottom, with the “basis for the next multi-year bull market” now taking hold:
“Gold has been trading in a cyclical bear market since 2011. In 2016, we expect gold and gold mines moving into an 8-year cycle bottom as the basis for the next multi-year bull market. Initially, we see gold profiting as a safe haven and as of 2017 [with] gold profiting from the U.S. dollar moving in a major top and starting a bear market.”
“In contrast to the underlying secular trend in commodities (which has turned bearish) we see gold (which is in our view a currency and not a commodity) still trading in a secular bull market.
Pattern wise we continue to see the 2011/2016 cyclical bear market in the same context as the 1975/1976 bear cycle in gold. Keep in mind, in the mid-70s gold lost 43% of its value from its January 1975 top before another gold bull market started into the January 1980 bubble peak. It is amazing to see that with a loss of 45% from its August 2011 top into the early December 2015 low, the decline in gold has more or less exactly the same proportion as in the mid-70s.
Furthermore, there are still a lot of market commentators who say that the August 2011 top in gold was the top of a bubble. According to the average gains we have seen in historical financial bubbles, the gold bull run from 2001 into 2011 (760%) was far away from any bubble territory.
- In the first gold bubble, gold gained 2400%.
- In the 1903 to 1929 Dow bubble, the Dow Jones Industrial gained 1200%.
- The 1979-1989 Nikkei bubble came in at around 2000% and
- the 1980 – 2000 Nasdaq bubble topped out a +3900%.
so if gold moves into a bubble, we would need to see a gold price of minimum $3,300, and in this case we would still talk about a low bubble phenomena such as the 1903 – 1929 Dow Jones bubble!!”
“Follow the munKNEE” via Twitter and/or Facebook and have your say. Shock us, surprise us, inform us, entertain us. Here’s your opportunity to start a dialogue. Our Twitter & Facebook feeds are also the most comprehensive resources of the very best-of-the-best financial, economic, investment and gold/silver articles out there. Mark them as your favorites and get access to every article as posted.
The research and charts are well worth a read and can be accessed here
[The original post by Marc O’Byrne (goldcore.com) is presented here by the editorial team of munKNEE.com (Your Key to Making Money!) and the FREE Market Intelligence Report newsletter (see sample here – sign up in the top right corner) in a slightly edited ([ ]) and/or abridged (…) format to provide a fast and easy read.]
Related Articles from the munKNEE Vault:
1. These 4 Factors Could (Should?) Drive Gold Prices Starting This Year
The following article outlines 4 factors which I believe will drive gold prices starting this year and beyond.
2. Gold Will Reach $2,500/ozt In the Near Future – and $10,000 Thereafter
After two years of declines, many investors sold their gold holdings and vowed never to invest in gold again. However, in the fall of 1976, gold began an ascent that saw it rise 750%, peaking at $850 a troy ounce three years and four months later. After a 3-year correction, the same opportunity to buy low exists today, just as it did in 1976.
3. Bear Market In Gold & Gold Stocks Will Likely End In Mid/Late 2016 – Here’s Why
The precious metals sector is entrenched in a seemingly forever bear market while the U.S. dollar’s bull market remains strong and is likely to continue. In this article we discuss our 2016 big picture outlook for the U.S. dollar, gold and gold stocks.
4. Gold – Is It A Commodity, A Currency, Neither or Both?
To answer the question “what drives the prices of gold” we have to determine the nature of gold. Is it a commodity, a currency, neither or both? This article does just that. Read on.