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
So writes Goldrunner* (www.GoldrunnerFractalAnalysis.com) in edited excerpts from his most recent newsletter to subscribers (excluding his illustrative charts which are only available to subscribers) posted here with permission. Go here to subscribe and receive his unique analyses with one-of-a-kind charting.
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Below are snippets of what Goldrunner had to say:
What we know.
1) The U.S. and other governments need Gold much higher to balance their balance sheets, but they need them much higher into a certain part, late in the cycle. Thus, they must manage the price of Gold until they have all of their debts they want to inflate away on their balance sheets. If Gold were to go into free-rise before that, then Gold would not go high enough to devalue those debts, and at the end of this currency fiasco the U.S. would still have a similar debt problem they are trying to inflate away. [Also read: Governments Will Want – Will NEED – Much Higher Gold Prices! Here’s Why]
2) So far, the USD inflation/ devaluation (and world currency inflation/ devaluation) is progressing much like the late 70’s. We know this because the USD Index is trading almost exactly as it did in the late 70’s, and we have monitored the chart of the USD Index.
3) The management of the price of Gold is very much like the late 70’s progression in terms of the Gold price rise. We know this because the chart of Gold for the current Gold Bull is very similar to the late 70’s in both price and time movements.
4) At this point in the cycle we suspect that Gold and Silver are ready to make the next more parabolic move on the chart like the late 70s. We expect this due to the close similarities of today’s Gold Chart to the late 70’s and considering #1, above.
We also have been seeing short-term intra-day drops in the Gold price that tend to get reversed, upward. JS says that these types of reversals, intra-day, could not happen if it was the Exchange Stabilization Fund that was managing the Gold price, down, so it is the hedge funds in action. This gives us reason to believe that we are very close to the next big run in Gold as GS and the ESF supports taking the price of Gold higher- sharply higher since the many will be jumping on board, all at the same time. This type of price action in Gold should be the final bottoming process before Gold and Silver move higher.
5) Silver might be expected to lag a bit at this juncture since it is heavily owned by smaller entities where Central Banks have done most of the buying in Gold yet Silver is more volatile and will likely outperform Gold in the coming parabolic run. Sprott appears to be taking the role of the Hunt Brothers in the current Bull and appears to have been the cause of the over-extended rise for Silver in the last run.
6) Over recent days we have seen attempts by some newsletter writers to address concerns of PM Stock investors in terms of why the PM Stocks are trading in the doldrums. These articles have been rather pithy with no good basis stated. IMO the PM Stock Indices are trading much like the late 70’s, but the longer time-frame due to higher EW degree this time makes everything more sluggish. I think the argument that the existence of the GLD is a competitor for the HUI Index just doesn’t fly. In that article the writer makes no real point- he basically takes all sides of the issue. Personally, I think the GLD ETF was created to make it easier for small investors to invest in a derivative of Gold with no ability to actually take delivery of the metal- to lure investors away from the futures market.
7) In another article the author bases his idea that the PM Stocks will not/never outperform Gold by using the BGMI as a proxy for the HUI back in the 70s. The BGMI was mostly composed of huge conglomerate corporations that produced lots of commodities, back then. Thus, the BGMI is simply a poor comparison. The bottom line is that by far the majority of investors are used to investing in Stocks, not commodities. These investors will stick with investing in Stocks because it is “what they know and feel comfortable with.” Other of these investors see the PM Stocks eventually gaining leverage to Gold and to Silver- and the late 70’s clearly suggest that they will be correct in that logic.
There is little doubt in my mind that we are very close to the point where Gold, Silver, and the PM Stocks will be moving up aggressively like the similar point in the late 70’s. The characteristic sideways move where the Central Banks heavily accumulate Gold has played out in a sideways move to the lower log channel. During this period the hedge funds were free to short PM Stocks as they wished, but that will be forcibly reversed as Gold and Silver rocket higher creating a ramp-up in reserve valuations in the ground for all PM Stocks and giving a huge lift to earnings of producers via much higher Gold, Silver, and by-product pricing.
For the moment, GOLDRUNNER ~ Email me at GOLDRUNNER44@AOL.COM with your questions and comments.
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.
*Goldrunner offers a subscription service which provides detailed technical analysis of where the price of gold, silver and precious metal stocks are going in each stage of their respective bull runs. This service comes with detailed charting based on conventional technical analysis and his proprietary fractal analysis based on the ’70s. Go here to subscribe.
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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.
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.