Best of the Week
Most Popular
1.Canada Real Estate Bubble - Harry_Dent
2.UK House Prices ‘On Brink’ Of Massive 40% Collapse - GoldCore
3.Best Cash ISA for Soaring Inflation, Kent Reliance Illustrates the Great ISA Rip Off - Nadeem_Walayat
4.Understanding true money, Pound Sterling must make another historic low, Euro and Gold outlook! - Marc_Horn
5.5 Maps That Explain The Modern Middle East - GEORGE FRIEDMAN
6.Gold Back With A Vengeance As Bitcoin Bubble Bursts - OilPrice_Com
7.Gold Summer Doldrums - Zeal_LLC
8.Crude Oil Trade & Nasdaq QQQ Update - Plunger
9.Gold And Silver – Why No Rally? Lies, Lies, And More Lies - Michael_Noonan
10.UK Election 2017 Disaster, Fake BrExit Chaos, Forecasting Lessons for Next Time - Nadeem_Walayat
Last 7 days
Saving Illinois: Getting More Bang for Its Bucks - 24th Jul 17
3 Stocks Sectors That Will Win in The Fed’s Great Balance-Sheet Unwind - 24th Jul 17
Activist Investors Are Taking Over Wall Street, Procter and Gamble Might Never Remain the Same - 24th Jul 17
Stock Market Still on Track - 24th Jul 17
Last Chance For US Dollar To Rally - 24th Jul 17
UK House Prices Momentum Crash Warns of 2017 Bear Market - Video - 22nd Jul 17
Crude Oil, Gold, ETFs & more: Pro-grade Market Forecasts - 22nd Jul 17
Warning: The Fed Is Preparing to Crash the Financial System Again - 21st Jul 17
Gold / Silver Shorts Extreme - 21st Jul 17
GBP/USD Bearish Factors - 21st Jul 17
Gold Hedges Against Currency Devaluation and Cost Of Fuel, Food, Beer and Housing - 21st Jul 17
Is It Worth Investing in Palladium? - 21st Jul 17
UK House Prices Momentum Crash Threatens Mini Bear Market 2017 - 21st Jul 17
The Fed May Show Trump No Love - 20th Jul 17
The 3 Best Asset Classes To Brace Your Portfolio For The Next Financial Crisis - 20th Jul 17
Gold Stocks and Bonds - Preparing for THE Bottom - 20th Jul 17
Millennials Can Punt On Bitcoin, Own Safe Haven Gold For Long Term - 20th Jul 17
Trump Has Found A Loophole To Rewrite Trade Agreements Without Anyone’s Permission - 20th Jul 17
Basic Materials and Commodities Analysis and Trend Forecasts - 20th Jul 17
Bitcoin PullBack Is Over (For Now): Cryptocurrencies Gain Nearly A 50% In Last 48 Hours - 19th Jul 17
AAPL's 6% June slide - When Prices Are Falling, TWO Numbers Matter Most - 19th Jul 17
Discover Why A Major American Revolution Is Brewing - 19th Jul 17
iGaming – Stock Prices - 19th Jul 17
The Socionomic Theory of Finance By Robert Prechter - Book Review - 18th Jul 17
Ethereum Versus Bitcoin – Which Cryptocurrency Will Win The War? - 18th Jul 17
Accepting a Society of Government Tyranny - 18th Jul 17
Gold Cheaper Than Buying Greek Villas in 2012 - 18th Jul 17
Why & How to Hedge the Growing Risks of Holding Stocks - 18th Jul 17
Relocation: Everything You Need to do for a Smooth Transition Abroad - 17th Jul 17
A Former Lehman Brothers Trader: It’s Time To Buy Brick And Mortar Retailers - 17th Jul 17
Bank Of England Warns “Bigger Systemic Risk” Now Than 2008 - 17th Jul 17
Bitcoin Price “Deja Vu” Corrective Sequence - 17th Jul 17
Charting New Low in Speculation in Gold and Silver Markets - 17th Jul 17
Bitcoin Crash - Is This The End of Cryptocurrencies? - 17th Jul 17
The Fed's Inflation Nightmare Scenario - 17th Jul 17
Billionaire Investors Backing A Marijuana Boom In 2017 - 17th Jul 17
Perfect Storm - This Fourth Turning has Over a Decade of Continuous Storms to Come - 17th Jul 17
Gold and Silver Biggest Opportunity Since Late 2015, Last Chance at These Prices - 17th Jul 17
Stock Market More to Go - 17th Jul 17
Emerging Markets & Basic Materials Stocks Breaking Out Together - 16th Jul 17
Stock Market SPX Uptrending Again After Microscopic Correction - 15th Jul 17

Market Oracle FREE Newsletter

Crude Oil, Gold, ETFs & more: Pro-grade Market Forecasts

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.


© 2005-2017 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