Gold Target And Timing
I’ve been looking more closely at the cycle timings and trying to achieve a ‘best fit’. I’m sticking with my target of around $2500, but I’m highlighting that it may be reached in Summer 2019. 2020 is still possible, it just depends how things develop into the cycle highs – they do have some ‘wriggle room’. There are other, even more ‘bullish’ interpretations, but I’m going to discount them unless things start to accelerate ahead of my expectations. We’ve seen another weekly close above the breakout (now support) line of the massive bullish symmetrical triangle. For that reason, I’m discounting any ‘bearish’ projections. If we find ourselves back inside the triangle, I’d be seriously worried. I don’t expect that to happen though. The dollar is locked into the down phase of its 16 year cycle, and gold is in the opposite position. The stars should be aligning here. The miners are still lagging, so once we clear the $1300-$1315 area, I would expect a surge in the miners and a big surge in silver, which has a lot of catching up to do. If I’m right, the next few weeks/months are going to be fun. Below is a log chart of gold, with the cycles shown by the red and blue lines at regular intervals. Notice also the TSI rising and crossing above zero for the first time in 16 years (as you would expect at the birth of a new cycle). Following a correction sometime late 2019-2020, I’d expect the final, spectacular phase of this bull cycle to commence, and then complete in the mid 2020’s. We can develop these thoughts as events unfold.
As I’ve already said, gold will need a VERY good reason not to rally hard here.
Northstar – I am assuming you have read Plunger’s excellent work on the Post Bubble Credit Contraction (PBC). He has shown that every 50-70 years we go through one, which we are in the middle of today. They typically last 20 years or so. Ours started in 2007/2008. During these PBC’s, the world’s senior currency (the USD in our case today) traditionally gets stronger. Since we are about half way through this period in time, and we have put in a leg up in the dollar (2008-2015) and a flag (2015-2017) we are just about due for the next leg up in the dollar which should last into the mid 2020’s (2025-2028). Based on the all the history of the PBC’s, the dollar’s next leg up could be the very good reason for gold not to rally here.
This of course is a macro view and gold could still rally in the short term, but I see the strength of the PBC easily trumping the normal high-low cycle of gold. Until you can fit the PBC into your thesis, I would be careful about expecting sky high gold prices.
Thanks for the comment Ken. I’m keeping Plungers thesis in the back of my mind at all times. I rate it as a low probability. Why ? I don’t really buy the post bubble contraction idea at the moment – base metals are surging, gold has broken out of a massive, bullish symmetrical triangle, and the long term indicators (MACD, TSI, TRIX) are incredibly well placed and gaining momentum, to support a big upside move. Gold doesn’t need a reason to rally, it needs a reason not to. What I mean by that is that it’s inert. It just sits there and measures the currency of the day by virtue of it’s rarity. If we continue to create exponentially rising debt to pay for everything, then gold can only keep repeating its regular 8 year cycle, which is brought about by investment patterns and cycles, as well as political cycles. Where I do agree with Plunger is that the SM is in nosebleed territory. I’m not going to say it can’t go higher, but I will say that I think it’s on a knife edge, where the rush for the exits could easily be triggered. I acknowledge that a sudden search for liquidity is likely to impact PM’s and the miners, but it’s all relative, and I favour the PM’s at this point.
Excellent Discussion KenS and Northstar. All I can add is Watch for Plungers weekend report ( This weekend)
I am fortunate to see the developing draft and it is yet again Brilliant.
Thanks Northstar for yet another great post. Agree with Fully on the excellent discussion!
There is far too much noise at the moment and you need to filter it out. Too many analysts (and posters on here) are changing from bear to bull and back again as the miners and metals wipsaw in a narrow trading range. I am keeping it simple, IMHO miners are in a great position at the moment and I have been building positions in a range of juniors, majors and explorers over the last few months and many are now well in profit and some just under.
We may see a pullback in the next week or so, but we will see. The SM may also have a pullback soon, but then both miners and the SM could rise together into 2018. I am also a member at EWT and I think that the analysts there are getting it spot on. Time to take a step back and look at the bigger picture and try to see the forest 🙂
Well put OJ. That’s a big question – just how much the stock market will pull back. 10-20% wouldn’t surprise me, although I know many are calling for more than that. I can envisage a short, sharp correction followed by new highs. That’s likely to be brought about by more ‘monetary magic’ or should I say, madness. At that point it could be some sort of final parabolic rise for stocks, with PM’s joining the party. A true ‘everything bubble’. It wouldn’t end well.
Keep Filtering out the noise NS and you do it better than most 🙂
Cheers OJ 😉
Thanks.