Friday , 28 November 2014

Coming Move In Gold Will See It Reach $3,200 by Late 2014 or Early 2015

The breakdown after the QE4  announcement, and now the extreme move into a yearly cycle low has, I  daresay, convinced everyone that the gold bull is over. I would argue that it is impossible for the gold bull to be over as long as central  banks around the world continue to debase their currencies [and that] gold is just creating the conditions – a T-1 pattern – necessary for its next leg up to what I expect to be…around $3200 sometime in late 2014 or early 2015. [Let me explain.] Words: 560; Charts: 3

So writes Toby Connor (http://goldscents.blogspot.ca) in edited excerpts from his original article* entitled Major Top in Stocks & Major Bottom in Gold.

This article is presented compliments of www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) and www.munKNEE.com (Your Key to Making Money!) and may have been edited ([ ]), abridged (…) and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement.

Connor goes on to write in further edited excerpts:

I am confident the latest counterfeiting operation by the Fed will push stocks up to at least test their 2007 highs, and expect we will see a marginal break above that level sometime this year – probably by the end of the month.  My current guess is that we will get a “sell the news” type of event as  soon as the sequestration can is kicked down the road and that will mark the top of this particular intermediate cycle. Make no mistake, though, we are still in a secular bear market. Stocks are testing their all-time highs at the  same time earnings are in decline, GDP has turned negative, and unemployment is starting to tick up.

Inflationary Surge Coming in Price of Gold

The stock market topping process will… be very extended and difficult…[and during the] process I expect  to see an inflationary surge very similar to what happened in the oil markets during the 2007 top…This time, however, I don’t think it’s going to be oil leading the inflationary charge. In order to generate that kind of move we need something that has formed a long consolidation, similar to what happened in oil, and preferably an asset that has declined long enough and far enough to push sentiment to negative extremes capable of convincing everyone that the bull market is over. Those are the conditions necessary in order to generate a massive  parabolic move over the next two years [and] the only asset that qualifies is, in my opinion, the precious metals markets.

What a T-1 Pattern Means for Gold

A T-1 pattern, similar to what  happened in oil during ’07-’08, is now unfolding in the gold market. The rules of a T-1 pattern state that:

  • a move followed by a sideways range often precedes another move of almost equal extent in the same direction as the original move.
  • Generally, when the second move from the sideways range has run its course, a counter move approaching the sideways range may be expected.

 

I think the gold chart is setting up to produce a monstrous T-1 pattern with a target around $3200 sometime in late 2014 or early 2015. Investors just need to get through the bottoming process of this yearly cycle low. Considering that gold is now on the 15th week of its intermediate cycle, which usually lasts about 18-25 weeks We should be getting close. The last intermediate cycle ran a bit long at 25 weeks. Long cycles are  usually followed by a short cycle so I would expect this cycle to run a bit short at 16-18 weeks.

 

 

Conclusion

All in all, I expect a final bottom sometime in the next 5-10 days and once that bottom has formed gold should be ready to break out of the  consolidation zone it has been in over the last year and a half and get  busy delivering the second leg of that T-1 pattern.

Editor’s Note: The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.

*http://goldscents.blogspot.ca/2013/02/major-top-in-stocks-major-bottom-in-gold.html

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One comment

  1. I LOVE how charts that display the future show straight lines upward.

    When I see those I use my rule of thumb which says to divide the slope by 4 and hope for the best!

    Actually, I believe that what is holding PM down is the realization that the majority of the people using “flat money” don’t seem to care if it is worthless, as long as it continues to “work” allowing them to pay for what they want. When the next big “thing” happens and all of a sudden supplies start running short, then PM will “zoom upward” as those that have will choose to barter what they have in excess for PM instead of flat money, even if new laws are past to prevent such deals: which is why I believe that the Government would like to see everyone use electronic money transactions (aka e-Money) as it totally eliminates the use of barter and PM’s…