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Gold Price Trend Forecast Summer 2019

Gold Price Going Parabolic

Commodities / Gold & Silver 2009 Nov 16, 2009 - 01:19 PM GMT

By: Captain_Hook

Commodities

Best Financial Markets Analysis ArticleGold is in the headlines right now because of India’s announcement to buy half the announced IMF sale, and possibly more. But this is not why gold advanced so strongly yesterday. It blew past previous highs because we are in a significant cycle down time for equities right now, and the perception is if stocks are not to follow the natural path in this regard, authorities will need to hyperinflate. Conveniently then, the dollar has reversed lower because of this, which is supporting equities and altering the crash signatures in the trade.


So you see India’s announcement is not the reason precious metals exploded higher yesterday in some degree of a parabolic move (this will be discussed further below), but the trigger for the move, with speculation and money printing, our bureaucracy’s two favorite things these days, the real culprits. All to save their precious stock market – that’s why Warren Buffett was out yesterday to jigger the Transports.

Unfortunately for him, this will not work, and the Dow / Gold Ratio will work lower anyway, which was forecast for you several weeks back now, at the turn. In this respect, it’s my belief the Dow / Gold Ratio is presently on it’s way to the next large round number at 5, characterized by an intermediate-term advance in gold, along with falling stocks. And again, this is why gold advanced so violently yesterday, because price managers are attempting to prevent stocks from falling because of the deflation risk, so within the formula, gold necessarily rose abruptly to counter act the risk of hyperinflation, which is what would be needed to prevent stocks from following their natural path lower. As suggested above, it won’t work, at least not for long, with a more severe crash resulting later. This means assuming price managers are successful in keeping stocks afloat through the jobs report Friday, next week could be ugly once they spend this energy, along with moving closer to options expiry.

In this respect it’s important to note that as forecast US index open index put / call ratios are not rising with falling stocks, which is supportive of the trend lower. (This has changed since this report was originally published.) So again, as options expiry approaches in a few weeks, the force of gravity will increase, and as suggested above, stocks could snap lower anyway. If the crash signatures are dismantled however, such an outcome could mean stocks remain at higher trajectories due to reaccelerating inflation, possibly leading to hyperinflation. Such an outcome would keep the Gold / Silver Ratio falling to historical norms, and then extremes, down in the mid to lower teens. In terms of other ratio related developments you should know about, the HUI / Gold Ratio put in an outside reversal higher yesterday signaling speculators think higher prices should be expected in the short-term, however the HUI / CDNX Ratio also put in an outside reversal to the upside, which should not have occurred if the move is to be sustainable.

That is to say, if this move higher in precious metals has entered its impulsive stage, the one alluded to above where the Gold / Silver Ratio takes a nosedive, then riskier stocks, represented by the TSX Venture Index (CDNX), should outperform the less risky represented by the Amex Gold Bugs Index (HUI), suggestive the apparent reversal in precious metal shares yesterday is suspect. Again, this is because of the stock market crash risk that could still become a reality as options expiry approaches. This is why I recommend you own bullion as opposed to stocks in core positions at the moment, because of this risk, which is still apparent in the ratios. If stocks can make it past options expiry without crashing, which is looking more probable each passing day they avoid such an outcome, then we will change our tune, as stocks should explode higher in discounting the hyperinflation risk. (See Figure 1)

Figure 1


Unfortunately we cannot carry on past this point, as the remainder of this analysis is reserved for our subscribers. Of course if the above is the kind of analysis you are looking for this is easily remedied by visiting our continually improved web site to discover more about how our service can help you in not only this regard, but also in achieving your financial goals. For your information, our newly reconstructed site includes such improvements as automated subscriptions, improvements to trend identifying / professionally annotated charts, to the more detailed quote pages exclusively designed for independent investors who like to stay on top of things. Here, in addition to improving our advisory service, our aim is to also provide a resource center, one where you have access to well presented 'key' information concerning the markets we cover.

And if you have any questions, comments, or criticisms regarding the above, please feel free to drop us a line. We very much enjoy hearing from you on these matters.

Good investing all.

By Captain Hook

http://www.treasurechestsinfo.com/

Treasure Chests is a market timing service specializing in value-based position trading in the precious metals and equity markets with an orientation geared to identifying intermediate-term swing trading opportunities. Specific opportunities are identified utilizing a combination of fundamental, technical, and inter-market analysis. This style of investing has proven very successful for wealthy and sophisticated investors, as it reduces risk and enhances returns when the methodology is applied effectively. Those interested in discovering more about how the strategies described above can enhance your wealth should visit our web site at Treasure Chests

Disclaimer: The above is a matter of opinion and is not intended as investment advice. Information and analysis above are derived from sources and utilizing methods believed reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Comments within the text should not be construed as specific recommendations to buy or sell securities. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities, as we are not registered brokers or advisors. Certain statements included herein may constitute "forward-looking statements" with the meaning of certain securities legislative measures. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the above mentioned companies, and / or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Do your own due diligence.

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