Best of the Week
Most Popular
1.A 'Wicked Rally' in Gold Price Predicted - The_Gold_Report
2.Gold and Silver Bullion Buying Opportunity for 2017? - Nadeem_Walayat
3.The Coming Stock Market Crash and WWIII - Brad_Gudgeon
4.First UK BrExit then Trump, Next BrExit Tsunami Wave to Hit Italy HARD Sunday! - Nadeem_Walayat
5.Trump Sets The Stage For A Huge Gold Rally In 2017 - James Burgess
6.Why We Haven’t Seen Gold Price Rally after Trump Victory - Harry_Dent
7.Silver Bullion Price Buying Opportunity for 2017? - Nadeem_Walayat
8.Trump Stocks Bull Market Furious Rally Towards Dow 20k as Bear Mantra Persists - Nadeem_Walayat
9.Gold Bullion Price Buying Opportunity for 2017? - Nadeem_Walayat
10.Trump's Presidency - Stock Market Crash or Start of New Mega-Trends - Sol_Palha
Last 7 days
Stock Market Saeculum 1st Turning Underway - 10th Dec 16
India's Stock Market: Nothing "Random" About It - 9th Dec 16
Gold Futures Selling Exhausting - 9th Dec 16
Cheap Large Icicle Christmas LED Lights Review - B&M Stores - 9th Dec 16
US Interest Rates and the Toughest Man Who Ever Lived - 9th Dec 16
Amazon UK Christmas Shopping Useless Delivery Tracking Warning Alert - 9th Dec 16
Euro-zone Crisis - The Soon To Erupt Euro Experiment - 9th Dec 16
Global Market Perspective 3 Killer Charts, 2 Fast Looks at Politics - 9th Dec 16
Trump Could Fuel A Nuclear Energy Boom In 2017 - 8th Dec 16
Our Future Economy, Jobs, Banking, And Governance – Part2 - 8th Dec 16
Developing Knowledge-Intensive Society and Knowledge Industrial Hub in Kerala - 8th Dec 16
Crude Oil and Gold, Silver Precious Metals Link - 8th Dec 16
Stock Market and the Great Middle Class Revolt Gets Bigger - 8th Dec 16
Protectionist Trump Policies To Crash Dollar, Gold and Bitcoin to Soar - 8th Dec 16
The Jaws of Life : The Most Hated Stocks Bull Market in History! - 8th Dec 16
Infrastructure A Budding Asset Class - 8th Dec 16
Trump Stocks Bull Market Furious Rally Towards Dow 20k as Bear Mantra Persists - 8th Dec 16
More Talk About More Economic Growth and More Globalization - 7th Dec 16
Cracks In US Treasury Bond Market, The Japanese Factor - 7th Dec 16
The Rise of Anti-Establishment Italy - 7th Dec 16
Trump Likely to Drive Another Bump in Stock Market Buybacks — Here’s How to Hedge - 7th Dec 16
World War II and the Origins of American Unease - 7th Dec 16
Online CFD Trading for Traders on a Budget - 7th Dec 16
Silver Bullion Price Buying Opportunity for 2017? - 7th Dec 16
The Imminent Multi-Trillion Dollar Surge In Social Security & Medicare Costs - 7th Dec 16
Gold Bullion Price Buying Opportunity for 2017? - 6th Dec 16
Shariah Gold Standard Approved for $2 Trillion Islamic Finance Market - 6th Dec 16
THE Gold Play for 2017 - 6th Dec 16
Trump Sets The Stage For A Huge Gold Rally In 2017 - 6th Dec 16
BrExit Tsunami Claims Emperor Renzi's Scalp, Counting Down to End of the EU, Next? - 6th Dec 16
Failed EU - Means an Expanded Dictatorship - 6th Dec 16
Crude Oil Prices: "Random"? Hardly - 5th Dec 16
The Coming Stock Market Crash and WWIII - 5th Dec 16
This Past Week in Gold Market - 5th Dec 16
Stock Market Short-Term Correction Underway - 5th Dec 16
If Trump Doesn’t Do This, We Will Have the Great Depression 2.0 - 5th Dec 16
India’s Demonetization Could Be the First Cash Domino to Fall - 5th Dec 16
Our Future Economy, Jobs, Banking, And Governance - 5th Dec 16
Gold and Silver Bullion Buying Opportunity for 2017? - 4th Dec 16
First UK BrExit then Trump, Next BrExit Tsunami Wave to Hit Italy HARD Sunday! - 3rd Dec 16
The 10YR Yield and SPX Stocks Bull Markets - 3rd Dec 16
Gold And Silver – Do Not Expect Much Difference With Trump Compared To Obama - 3rd Dec 16
Gold, Currencies and Markets Critical 61.8% Retracements - 2nd Dec 16
Gold Junior Stocks Q3’16 Fundamentals - 2nd Dec 16
Adventures in Castro’s Cuba - 2nd Dec 16
We Are Putting Off the Inevitable - 2nd Dec 16
Macroeconomic Cycles & Demographics - A Fuse, An Explosive and The Igniting Catalyst - 2nd Dec 16

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

$10000 Gold

Gold Price in 2016

Commodities / Gold and Silver 2016 Jan 15, 2016 - 05:10 PM GMT

By: DeviantInvestor

Commodities

We all know that gold prices in US dollars have been in a downtrend for about 4.5 years.

We all know that gold prices rise, on average, as the underlying currency declines in value.  Gold in the US was priced under $21 per ounce when the Federal Reserve was established.  Since then the dollar has been devalued and gold has increased in price by a factor of about 50.

It is the same story around the world, whether you evaluate in terms of British pounds, euros, rubles, yen, or any other debt based fiat paper currency.


So what are gold prices today and what will they be in the next two years?

  1. As I write gold is priced at about $1,100, down over 40% from its all-time high but more than $50 above recent lows.
  2. Gold prices – paper gold prices established on COMEX – are oversold weekly and monthly. The next big move is likely higher.  See charts below.
  3. Global debt exceeds $200 Trillion. Central banks will borrow currencies into existence to support overspending by their governments, devalue their currencies, and do whatever they believe is necessary to support a wobbly financial system.  Expect more devaluations and higher gold prices in fiat currencies.

The vertical purple lines on the monthly chart are spaced about every 7.5 years, approximately marking lows in 1985, 1993, 2001, 2008, and 2015.  Gold prices are currently in the zone for an expected cyclic bottom.  In our central bank managed financial system, we should NOT rely upon cycles, but we should not ignore them either.

  • Cycles indicate gold prices are in the time zone for a low.
  • The purple ovals at the bottom of the monthly chart on the TDI indicator show that monthly gold prices are oversold and due for a bounce.
  • The light green ovals at the bottom of the weekly chart on the TDI indicator shows that weekly gold prices are oversold and due for a bounce.

Other Considerations:

  • After multiple promises about “no boots on the ground” the US now has boots on the ground in Iraq, Syria, and over 100 other locations. A large military is expensive and must be supported by debt, deficits, taxes, and promises.  Expect more dollar devaluation.
  • US government expenses are out of control – currently around $4 Trillion per year – and going higher. Revenues lag expenses.  Expect more debt, deficits, promises and dollar devaluation.
  • The US stock market is rolling over in its 7+ year cycle. The recession and stock market losses will hurt the economy and US government revenues.  Expect more debt, deficits, promises and dollar devaluation.
  • “Regression to the mean” suggests gold will correct higher and the S&P will correct lower. The correction in both is in process.
  • China, India, and Russia are trading dollars and bonds for gold. They want physical gold, not paper promises such as COMEX gold contracts.  They know the truth – gold thrives, paper dies.
  • Global banks have created and profited from the creation of about a $1,000 Trillion in derivatives. This has been good for bank profits and bonuses, BUT  …  what could go wrong?  Is your bank at risk?  Your pension fund?  Will physical gold and silver even be available to buy when it becomes devastatingly clear in 2016 – 2017 that we need it as insurance and as a store of value to protect from devaluing fiat currencies?

Gold Valuation Model:

Harry Dent thinks gold prices may drop to $250.  In a hyperinflation, gold prices could easily exceed $10,000.  What should we believe?  My solution was to create a valuation (not a timing model) model for gold prices, which I published over a year ago.  Since 1971, using moving-average smoothed prices, the valuation model had a 98% statistical correlation with actual smoothed gold prices.  The model tells us that a “fair” value for gold in 2015 is $1,200 – $1,300.  Gold prices on COMEX are too low today.

The model is based on US national debt (massive and exponentially increasing), the S&P 500 Index (rolling over) and the price of crude oil (bottoming – I think).  The model indicates gold prices should be valued much higher in the next several years — UNLESS you think national debt will flat-line or decrease, the S&P 500 will rally much higher, and crude oil prices will stay at currently depressed levels for several more years.

CONCLUSIONS:

  • Gold prices are in the time zone for a 7 year bottom. Buy for insurance.
  • Gold prices are oversold on a weekly and monthly basis and indicate higher prices are likely. Buy for insurance.
  • The financial world is more unstable and dangerous each day. War is escalating globally.  Economies are rolling over into recession.  Derivatives …. much could go wrong.  Buy gold for insurance.
  • Central banks will devalue their currencies as certainly as the sun will rise and politicians will make promises they do not intend to keep. Buy gold for insurance.
  • My gold valuation model indicates gold prices are too low.
  • Gold (and silver) are insurance to protect from devaluing currencies, central bank manipulations, deficit spending, massive unpayable debt, and politicians pushing their countries into expanded wars. We need such insurance.

Gold thrives, paper dies!

Gary Christenson

GE Christenson aka Deviant Investor If you would like to be updated on new blog posts, please subscribe to my RSS Feed or e-mail

My books are available on Amazon and at gechristenson.com

© 2016 Copyright Deviant Investor - 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.

Deviant Investor Archive

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


Post Comment

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

Catching a Falling Financial Knife