When are Gold and Silver going to start a huge parabolic move up? I, personally, think that we are sitting at the cusp [of such happening] as we speak on an intermediate-term basis….Below are… the fundamentals and technical set-up [to that end].
So writes Goldrunner in edited excerpts from his most recent newsletter to subscribers (excluding his illustrative charts which are only available to subscribers) posted here with permission.
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Goldrunner goes on to say in further edited excerpts:
1) The U.S. and other countries NEED Gold vastly higher to balance their balance sheets – there is no other way to deal with their huge debt loads except a Deflationary Depression. They have chosen a Stagflation Depression since a Deflationary Depression would be the end of the Fed.
2) The U.S. still has about $87 Trillion of debt that is not yet on its balance sheet according to Amerman. In order to get the debt onto the U.S. balance sheet, it would require the Fed to print a lot more Dollars.
3) Periodically for the last century, or so, the U.S. has devalued the Dollar to get out of these messes, and the DJIA to Gold ratio has approached a 1 to 1 ratio. In the early 30’s the Dollar was devalued 75% as the price of Gold was mechanically raised from $20 per ounce to $35 per ounce. In the late 70’s the USD was devalued about 75% via Dollar printing, mostly through the bank multiplier system. This time the Dollar printing must come via debt monetization/ QE. The point of the ramp up in debt monetization has to be timed to the cycle since the first real parabolic move up in Gold like in 1979 will start the clock ticking for when all of the debt must be on the U.S. Balance Sheet.
4) All of the talk about the Economy recovering is complete crap. The massive debts are still there, haunting the economy. All of the unfunded debts ($87 Trillion?) must be defaulted upon, one way or the other. The Fed is printing Dollars to cover around 60% of the U.S. expenses. The coming US Dollar Devaluation will likely approach the 75% level, and it will affect everybody in the States – bank accounts, Bond holdings, Stock holdings, Pension Plans, Life Insurance Policies – practically everything will be devalued by the same percentage as the USD. Only items with intrinsic value have a chance to rise enough to neutralize the Great Devaluation, and a few items will likely outperform.
5) We expect the price charts to continue to track those of the late 70’s fractal, since the Dollar Devaluation is fractal. Gold will be the inverse of the U.S. Dollar Devaluation – it has to be since Gold is the ultimate constant value and is denominated in Dollars in the U.S.. Because of this, Gold will be the first item that fully reflects the Dollar Devaluation like the late 70’s. This will allow physical Gold holders to rotate out of full valuation due to Dollar Devaluation into asset classes that lag like in the late 70’s. For instance the DJIA Stocks did not reach full re-pricing in devalued Dollars until the economy eventually recovered so that earnings and dividends recovered.
6) Silver and the PM Stocks carry more leverage than Gold at this point in the cycle so they will likely outperform going forward like the late 70’s where the PM Stocks made a final huge move after Gold and Silver topped. This was mainly because reserve valuations lag the rise in the price of Gold and Silver with companies bidding up those resource valuations late in the cycle.
Some are suggesting that “GLD” and other ETFs have hurt the Gold stocks this time around. That is crazy because we know that the PM Stocks traded much like today in…[the late 70’s] due to the shorting of the PM Stocks at this point in the cycle. GLD simply tracks Gold.
Those choosing to invest in PM Stocks do so mainly for two reasons:
- they are more comfortable with owning Stocks, or
- they want the leverage to Gold that the PM Stocks will offer.
The leverage of the PM Stocks to Gold comes from 2 sources:
- The coming parabolic moves in Gold, like the 70’s, will be “multiples” of the cost to mine it, giving leverage to the PM Miner stock pricing.
- The extreme coming price rise for resources in the ground, like the 70s, will propel PM Stock reserve valuations, higher. That is why the shorts will need to cover.
7) The short-term fundamentals are now screaming “Bottom.” The Gold shorts are “going long” per the COT numbers while the always long small specs are going hog wild short….
8) The Central Banks have been heavily buying so they will own Gold to cover the balance sheets problems. They have placed a solid bottom under the price of Gold that has supported the sideways correction in Gold. They only have till Gold reaches the lower log channel bottom to do so, and we are almost there.
9) ……[The information in this point reserved for subscribers.]
10) The current horrid sentiment toward the PM Sector as we reach the termination portion of this correction is to be expected as JS is pointing out. Most countries need Gold much higher as the cycle plays out so they are all aggressively devaluing their paper currencies…The paper currency indices will trade sideways in price while their values will move sharply lower to the tune of 70%, or more. Think about it – $87 Trillion Dollars are the needs for the U.S. according to Dan. We don’t have it, and we can’t get it in taxes – we have to print it all!
We have discussed [in previous articles]:
1) The Fractal relationship of Gold, Silver, the PM Stocks, the DJIA, the USD Index, Copper, and other price charts between…[the late 70’s] and today….
2) The Fractal comparison between today and 2005….
3) The Dollar Printing via the Fed Monetary Base Chart is…again breaking out to the upside. The correction in the Fed Monetary Base is over as the next run in debt monetization is now in progress, and it will drive the price of Gold vastly higher!
So, what is my answer to the question in the title? The fundamentals of massive Dollar printing, the COT numbers, the new expansion in the Fed Monetary Base, and the cycle all point up. Most PM investors are panicking, down. This is what JS has been ranting about, does it not?
- A Plea From Jim Sinclair: You Are Being Played – Do NOT Give Up Your Gold!
- Jim Sinclair: This is War – Don’t Play Their Game – Stand Firm – Stay the Course – Gold is Going to $3,500
…It looks to me like we are waiting for many of “the PM Bulls” to get off at the 3 Fan-line Station so Gold, Silver, and the PM Stocks can rip higher, leaving many to chase the PM Train.
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.
That governments will want – and will NEED – much, much higher gold and silver prices in the future is counter intuitive, given that they have done everything within their power to throttle back and to keep a lid on bullion prices. Let me explain why. Words: 1300
Sentiment in the precious metals sector is in the toilet yet the fundamentals for the sector are off the walls positive. That is not secret, but it is what creates huge market moves in the direction of the fundamentals. In fact, market management will never move price against the underlying fundamentals for too long a period of time.
One never knows exactly where Precious Metals are going so I always try to keep in mind a list of items that are probable based on the facts that are evident. I call this “what we know” and “what we don’t know” so let’s take a look what we “know” and “don’t know” at this point in time. Words: 872
This week could see a very significant historical bottoming point of interest for Gold and for Silver. Big moves late in the cycle for Gold and for Silver come after long sideways movements suggesting that both precious metals are ready to go parabolic.
Our subscription service provides detailed technical analysis of where the price of gold, silver and precious metal stocks are going short term (in the next week or two), intermediate term (within the next 3-6 months) and long term (the ultimate top) in each stage of their respective bull runs. This service comes with detailed charting based on conventional technical analysis and our proprietary fractal analysis based on the ’70s. Below are some of our latest comments and rationale for expected price movements in gold without illustative charts which are only available to subscribers. Words: 1000
The prospects look great for Gold and Silver to move sharply higher into 2013 to mimic the moves made in the 2005/ 2006 period and especially in 1979. In both cases back then the PM Stock Indices made big runs along with Gold and Silver. As such, the current HUI looks good for a major bottom to now be in place and to mimic the PM Stock Surrogate chart from the late 70’s. This would see the HUI go as high as the 1000 area in 2013. Let me explain further. Words: 640
Personally, based on the fundamentals at hand and the fact that Gold doubled its log channel around this point in the cycle; I expect Silver to bust up out of its log channel in 2013. Initially, I look for Silver to reach the $60 to $68 level, first and hold open the possibility for Silver to do much more on the upside as the 70’s Silver Chart reflects.
My Fractal Gold chart work is a direct comparison of Gold, today, to the late 70’s Gold Parabola. Thus, “timing” is taken directly from the late 70’s cycle, with price targets created from a combination of the late 70’s Gold price and different technical analysis techniques. We developed a price target back in 2006/ 2007 for Gold to reach the $10,000 to $12,000 range during this Gold Bull and we still stand by that forecast. Let me explain where we are at this point in time.
The government continues to assure us that happy days are here again for the U.S. economy and that we don’t have anything to worry about – but should we trust what the CBO is telling us now? Of course not. Instead, perhaps we should listen to some of the men that successfully warned us about the last financial crisis and here is what they have to say. Words: 800
The paper gold market is being used to shake the bullish tree harder this time than any time before because of what is to come. Fear is the most powerful emotion in markets and it is being used perfectly to enrich the grand names of finance at your expense. We are right in front of that time when the market performs a classic bottom both in shares and physical. From this point gold is going to and through $3500 [so] if you are unable to buy at this time there is one thing you can do – to get into the fight and out of the stands. That act is do nothing, and do not capitulate. Let them play the price game, but give them nothing whatsoever of yours. Words: 758
There is a nasty game taking place which relies entirely on scaring you out of your wits. Yes, out of your mind, so you sell something of great value for peanuts to the exact party playing with your head via price. When you must look at the action, remember there is a buyer for every seller. That buyer is not scared out of his/her wits if you sell to stop the pain you are in. This period is, in my opinion, the last and largest attack you will see perpetrated on us before gold closes over $3500. This period of pain will not be measured in months, but counted in history as days. Stand firm and stay the course! Words: 787
The “Deflationary” portion of the long-term economic cycle is called Kondratieff Winter. It is characterized by huge debts with a topping economy and stock market. We hit the K-Wave Winter in 1929, and again in the year 2000. The most important factor in how things play out in a K-Winter is the “state of the Dollar.”
Greenspan orchestrated massive asset price inflation in the face of K-Winter Deflation by aggressively printing and devaluing the US Dollar. Many look to see “where the Dollars are going”, but it is the effect of Dollar Devaluation on Price Inflation that is most important. The Dollar Devaluation will grossly devalue the debts while driving key asset prices like Gold sharply, higher.
This period of the long-term investing cycle is all about reality versus fantasy, but on several different levels. The system has been turned upside down by using “paper derivatives” that can be expanded to infinity for “price discovery.” Even paper money is a “derivative” since periodically in the long-term cycle, like today, the world must turn to REAL MONEY GOLD to bail out the paper currency system.
Since the Fed has the control of the money, it knows in advance what it will do. Thus, the Fed Banks have very powerful legal inside information and can front-run everything that they do while taking no risk, whatsoever!
The 73 week exponential Moving average shown on the chart in red is the kind of simple indicator that can give the long-term investor the confidence to invest/ stay invested in Gold. We can see on the chart that since the inception of the Gold Bull Market down at the “Entry for Gold Bull” label, Gold has only briefly fallen below the RED LINE 2 times.
The concept of “value” is extremely important, especially when Dollars are being printed aggressively. This is because the value of your Dollars is falling. Most people look at a Dollar and see a Dollar. They don’t understand that the worth of a Dollar can fall dramatically in times like today.