Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Life Sciences Biotech Smaller Cap High Risk Stocks Investing Binge - 24th Jun 21
Central Banks to Keep Buying Gold - 24th Jun 21
Will Gold Survive Hawkish Fed? - 24th Jun 21
The Clean Energy Compound That Could Change The World - 24th Jun 21
Everybody's Getting Rich (and Having Fun) Except Me - 24th Jun 21
WESTERN DIGITAL WDC Stock Trend Analysis - CHIA! - Risk 1 - 23rd Jun 21
AMC Is the Best-Performing Stock in America: Don’t Buy It - 23rd Jun 21
Stock Market Calling the Fed‘s Bluff - 23rd Jun 21
Could Bitcoin Price CRASH Target A Bottom Below $7500? - 23rd Jun 21
Bitcoin and cryptos: Your 'long-term investment'? - 23rd Jun 21
Unlocking The Next Stage Of The Hydrogen Boom - 23rd Jun 21
USDT Ponzi Scheme FINAL WARNING To EXIT Before Tether Collapses Crypto Exchange Markets - 22nd Jun 21
Stock Market Correction Starting - 22nd Jun 21
This Green SuperFuel Could Change Everything For the $14 Trillion Shipping Industry - 22nd Jun 21
Virgin Media Fibre Broadband Installation - What to Expect, Quality of Wiring, Service etc. - 21st Jun 21
Feel the Inflationary Heartbeat - 21st Jun 21
The Green Superfuel That Could Disrupt Global Energy Markers - 21st Jun 21
How Binance SCAMs Crypto Traders with UP DOWN Coins, Futures, Options and Leverage - Don't Get Bogdanoffed! - 20th Jun 21
Smart Money Accumulating Physical Silver Ahead Of New Basel III Regulations And Price Explosion To $44 - 20th Jun 21
Rambling Fed Triggers Gold/Silver Correction: Are Investors Being Duped? - 20th Jun 21
Gold: The Fed Wreaked Havoc on the Precious Metals - 20th Jun 21
Investing in the Tulip Crypto Mania 2021 - 19th Jun 21
Here’s Why Historic US Housing Market Boom Can Continue - 19th Jun 21
Cryptos: What the "Bizarre" World of Non-Fungible Tokens May Be Signaling - 19th Jun 21
Hyperinflationary Expectations: Reflections on Cryptocurrency and the Markets - 19th Jun 21
Gold Prices Investors beat Central Banks and Jewelry, as having the most Impact - 18th Jun 21
Has the Dust Settled After Fed Day? Not Just Yet - 18th Jun 21
Gold Asks: Will the Economic Boom Continue? - 18th Jun 21
STABLE COINS PONZI Crypto SCAM WARNING! Iron Titan CRASH to ZERO! Exit USDT While You Can! - 18th Jun 21
FOMC Surprise Takeaways - 18th Jun 21
Youtube Upload Stuck at 0% QUICK FIXES Solutions Tutorial - 18th Jun 21
AI Stock Buying Levels, Ratings, Valuations Video - 18th Jun 21
AI Stock Buying Levels, Ratings, Valuations and Trend Analysis into Market Correction - 17th Jun 21
Stocks, Gold, Silver Markets Inflation Tipping Point - 17th Jun 21
Letting Yourself Relax with Activities That You Might Not Have Considered - 17th Jun 21
RAMPANT MONEY PRINTING INFLATION BIG PICTURE! - 16th Jun 21
The Federal Reserve and Inflation - 16th Jun 21
Inflation Soars 5%! Will Gold Skyrocket? - 16th Jun 21
Stock Market Sentiment Speaks: Inflation Is For Fools - 16th Jun 21
Four News Events That Could Drive Gold Bullion Demand - 16th Jun 21
5 ways that crypto is changing the face of online casinos - 16th Jun 21
Transitory Inflation Debate - 15th Jun 21
USDX: The Cleanest Shirt Among the Dirty Laundry - 15th Jun 21
Inflation and Stock Market SPX Record Highs. PPI, FOMC Meeting in Focus - 15th Jun 21
Stock Market SPX 4310 Right Around the Corner! - 15th Jun 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stocks, Silver, Gold and Bonds, Recession / Depression Until 2016?

Stock-Markets / Financial Markets 2011 Sep 25, 2011 - 03:24 AM GMT

By: Willem_Weytjens

Stock-Markets

Diamond Rated - Best Financial Markets Analysis ArticleLet’s start with an update of an article I wrote on July 20th 2011. If the pattern isn’t broken soon, this could mean we are about to see 2008 all over again, and silver could drop another 50% from here:


Chart courtesy Prorealtime.com

The following chart is an updated version of one I also posted a while ago. It shows that when the dollar drops, commodities rally (green zones), and that when the dollar rallies, commodities drop (red zones). Currently we are in a red zone.

Chart courtesy Stockcharts.com

The following chart shows us the Gold Miners Bullish Percentage Index. As we can see, when the BPGDM Index fell below 50 and the RSI reached oversold levels, Gold was usually at or very close to a bottom  (see green Diamonds on the chart).
When the BPGDM index was above 70, gold often topped (see red Diamonds). Right now, the RSI is getting into oversold territory and the BPGDM index is at 30, meaning we might be at or very close to a bottom.

Chart courtesy Stockcharts.com

When we look at the 10Year Return for gold, we can see that those who bought gold 10 years ago, are now looking back at a return of 570%. That’s a nice profit, but look at 1980. Those who bought gold in 1970 had made almost 2,000% by 1980. Compared to 1980, we are nowhere near a top in gold.

Chart: Own calculations

When we look at bond yields, we can see that from the early 60′s to the early 80′s, bonds yields rose as inflation was rising. Higher inflation caused gold to rise.
From the early 80′s on, yields fell as a consequence of lower inflation. Gold also fell. That made sense.

However, from the early 2000′s, gold has been on the rise, but yields kept falling, as reported inflation was low. Who or What is wrong: mr. Bernanke and his statistics, or Gold? When I look at the real cost of living, I tend to agree with Gold or statistics of Shadowstats.com instead of mr. Bernanke, who – as Marc Faber and Jim Rogers say – has never been right about anything.

Chart: Own calculations

Besides the 10Year Return of Gold, I also calculated the 10Year Return of Bond Holders. I noticed a similar pattern in 10Year Returns of Bonds and 10Year Returns of Gold, be it over a different period of time. The 10Year Return of Bonds is now in the same position as gold was in late 1998, right before the bull market started. If history is about to repeat, Bond Yields will start a bull market, meaning Bond Prices (which are inversely correlated with Bond Yields) will start a bear market pretty soon. Is the final pillar (which mr. Sinclair has been talking about for 10 years now) about to break?

Chart: Own calculations

Please have a look at the following chart which plots the weekly price of Gold right now compared to the gold Price in the late ’70s:

Perhaps the stock markets are telling us we are in a similar position as in 1979 rather than in 2008:

The Total Return Index is also showing a similar pattern, which could mean we won’t make new highs until late 2016 (and thus remain in Recession/Depression mode until then)

Chart courtesy thechartstore.com

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.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

irw
01 Oct 11, 09:01
You're a genius

I think you are about the only person to correctly point out that we are replaying the sideways market of the 1970s...

If someone says that we are in the 1930s again I will scream!


Post Comment

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