Best of the Week
Most Popular
1.Gold Price Trend Forecast, Where are the Gold Traders? - Bob_Loukas
2.Stocks Bear Market of 2017 Begins? Shorting the Dow At its Peak! - Nadeem_Walayat
3.Betting on President Trump Leaving Office Early, Presidency End Date - Betfair Market - Nadeem_Walayat
4.Why Stock Market Analysts Will be Wrong About 2017 - Clif_Droke
5.Is This The Best Way For Investors To Play The Electric Car Boom - OilPrice_Com
6.Silver Price 2017 Trend Forecast Update - Video - Nadeem_Walayat
7.Gold Price Set For Very Bullish 2017, Trend Forecast - Austin_Galt
8.10 Things I learned From Meetings With Trump’s Transition Team - - John_Mauldin
9.How Investors Can Profit From Trumps Military Ambitions - OilPrice_Com
10.Channel 4 War on 'Fake News', Forgets Own Alt Reality Propaganda Broadcasting - Nadeem_Walayat
Last 7 days
Stock Market SPX New All-time Highs Continue - 25th Feb 17
POWERFUL GOLD & SILVER COILED SPRINGS: Important Charts You Have To See - 25th Feb 17
Underperformance in Gold Stocks Argues for Interim Peak - 25th Feb 17
Watch What Happens When Silver Price Hits $26...  - 25th Feb 17
Gold Futures Buying Yet to Start - 25th Feb 17
When the Stock Market Flying Pig Tops - 24th Feb 17
Gold, Second Fed Hike and Interest Rates - 24th Feb 17
Bitcoin Price Hits Record High! - 24th Feb 17
Another Stock Market Bubble? Bring it On! - 24th Feb 17
What Investors Need To Know About U.S. Money Market Funds? - 24th Feb 17
When Was America’s Peak Wealth? - 24th Feb 17
The Oscars – Worth Their Weight in Gold? - 24th Feb 17
The Best Reasons to Buy Gold in the Age of Trump - 22nd Feb 17
Silver, The Return of Stagflation - 22nd Feb 17
Why EU BrExit Single Market Access Hard line is European Union Committing Suicide - 22nd Feb 17
Gold: Short End US Rates Matter More Than Long End Real Yields - 22nd Feb 17
CONTINENTAL RESOURCES: Example Of What Is Horribly Wrong With The U.S. Shale Oil Industry - 22nd Feb 17
Here’s Proof Rising Rates Are Good for Gold - 21st Feb 17
Gold and Silver Weekly Update - 21st Feb 17
US Dollar and Gold Battle of the Cycles - 21st Feb 17
NSA and CIA is the Enemy of the People - 21st Feb 17
Big Moves in the World Stock Markets - Big Bases - 21st Feb 17
Stock Market Uptrend Continues - 21st Feb 17
Brent Crude Oil Price Technical Update: Low Volatility Leads to High Volatility - 20th Feb 17
Trump’s Tax System Could Spark The Wave Of Self-Employment - 20th Feb 17
Here’s How to Stay Ahead of Machines and AI - 20th Feb 17
Warning Signs Of Instability In Russia - 20th Feb 17
Warning: This Energy Investment Could Wreak Havoc On Your Portfolio - 20th Feb 17
The Mother of All Financial Bubbles will be Unimaginably Destructive when it Bursts - 19th Feb 17
Gold’s Fundamentals Strengthen - 18th Feb 17
The Flynn Fiascom, the Trump Revolution Ends in a Whimper - 18th Feb 17
Not Nearly Enough Economic Growth To Keep Growing - 18th Feb 17
SPX Stocks Bull Market Continues to make New Highs - 18th Feb 17
China Disaster to Trigger Gold Run, Trump to Appoint 5 of 7 Fed Governors - 18th Feb 17

Market Oracle FREE Newsletter

State of Global Markets 2017 - Report

Gold Deja Vu 1980?

Commodities / Gold and Silver 2011 Sep 14, 2011 - 01:48 AM GMT

By: Willem_Weytjens

Commodities

Diamond Rated - Best Financial Markets Analysis ArticleHave you ever experienced a "Deja Vu" feeling? Well, if you have never experienced one, maybe after reading this post you will.

Let's start with a technical chart of Gold. These days, gold is holding up strongly, and is only $80 below its all-time high.


If this continues, we might consolidate for a couple of weeks, to work off the overbought condition of the MACD indicator.

Chart: Prorealtime

Now have a look at the following Chart:

Chart: Prorealtime

The chart above is the gold price in 1970, right before it more than doubled 2 months later.

Don't they look very similar? To show you, I will now place one chart on top of the other one:

Chart: Prorealtime

Well, since Gold is acting very much like in the seventies, let's see what happened after... Based on this chart, Gold could consolidate until mid-late October, and then Double again in the weeks/months following.

As of late, the shares of mining companies have been lagging the Gold price Big time!

However, as we can see in the chart below, the mining shares (represented by the Barron's Gold Mining Index) follow the gold price nicely over time. It looks like the Mining companies are breaking out of a multi-decade long consolidation pattern:

When we measure the BGMI (Barron's Gold Mining Index) in Gold, we can plot the outperformance or underperformance of Gold stocks compared to Physical Gold. A falling ratio means Gold stocks Underperform Gold, or equivalently, Gold outperforms Gold stocks.

Notice that the gold stocks were also underperforming gold before the top of 1980!

The following chart is the same chart as above, but now with some support and resistance lines.

However, the most interesting observation is that as gold peaked in 1980, the Mining Stocks first retreated along with Gold, but then doubled in the months that followed, while gold did not make a new high until 2008!

What will happen to Silver if Gold doubles over the next couple of months?

If history is any guide, silver will also rally substantially.

At the top of 1980, on January 21st, ONE ounce of Silver was 4.79% of the price of ONE ounce of Gold. Right now it is only 2.28% of the price of Gold. So if Gold is about to double from here, Silver should at least double as well, and if we would get back to the high of 1980 (Silver Price as a % of the Gold Price), Silver could potentially more than QUADRUPLE from here...

***** You can now try out our services during 5 days for only $5. That is only $1 per day! For more information, please visit the following Link: $5 Trial *****

For more analyses and trading updates, please visit www.profitimes.com

Willem Weytjens

www.profitimes.com

© 2011 Copyright Willem Weytjens - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

R Vogel
14 Sep 11, 06:37
No Comparison

If one likes to compare 1980 with now, one must plot the US Federal Fund Rates direct under the gold price chart. Then you'll realize that these are two different animals!


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife