Gold is now in the process of breaking out from a 5 year consolidation [and there] is a strong sign that the next move in gold to new highs is imminent.
The original article has been edited here for length (…) and clarity ([ ])
As the chart below shows, gold rose every year from $300 in 2002 to $1,920 in 2011. In 2013 a bigger correction started which ended in 2015. Since then gold has only moved up slowly just like it did in 1999-2001.
We need to get proper confirmation with a move to $1,400 but the rising MACD indicator is a strong sign…[and] the chart also shows that gold is in a strong uptrend and that the correction in the last 5 years is minor and finishing.
Today at $1,350, gold is as unloved and undervalued as it was…in 2002 at $300. On an real inflation adjusted basis gold at $1,350 today is at the same level as in 2002. (see chart below) and also at a 300 year low. The 1980 gold peak at $850, adjusted for inflation, would be $16,450 in today’s money – 12x higher than currently. That price is more in line with our own targets.
Silver is even more undervalued. On the same inflation adjusted basis, silver is also at a 300 year low. At $17.20 today, inflation adjusted silver is the same as in 2000 at around $4 and the 1980 silver high of $50 would today be $761 – a 44x increase from here.
Gold at $16,450 and silver at $761 makes the gold-silver ratio 22 which is in line with historical levels but, since the ratio is just below 79 today, it means that silver will move almost 4x as fast as gold.
Once the intervention in the paper market fails, which could happen at any time, the moves in gold and silver will be explosive. The time to own physical gold and silver is today and not when they move to new highs. Both metals are at inflation adjusted historical lows and the downside risk is minimal. Also, they probably are the most undervalued of all assets currently.
With geopolitical, economic and financial risks at an extreme high, please don’t ignore these risks and don’t ignore history and, with the precious metals at extreme lows, it would be very unwise not to own substantial protection in the form of physical gold and silver.
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The majority of analysts maintain that gold will reach a parabolic peak price somewhere in excess of $5,000 per troy ounce in the next few years. Given the fact that the historical movement of silver is 90 – 95% correlated with that of gold suggests that a much higher price for silver can also be anticipated. Couple that with the fact that silver is currently greatly undervalued relative to its average long-term historical relationship with gold and it is realistic to expect that silver will eventually escalate dramatically in price. How much? This article applies the historical gold:silver ratios to come up with a range of prices based on specific price levels for gold being reached.
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It’s Economics 101. Price works to balance supply and demand. Limited supply causes higher prices; higher prices help curb demand…[and] that equation is playing out right now in the silver market. Mined silver supplies have been drying up over the past few years, while silver prices have climbed 20% in the same time frame…
Silver has often rebounded nearly 100% within 12-15 months after bad and long bear markets. History says Silver is ripe for a similar move over the next 12 to 18 months.
Silver is now rarer than gold and will be for all of eternity. From this point forth we work from current silver production alone and, from this point forth, demand will outstrip production without exception. Can you imagine what that means for the future price of this, indeed, precious metal? Forget about the popular expression: ‘Got gold?’ The much more important – and potentially more profitable – question to ask these days is, ‘Got silver?’
Silver in early 2018 is inexpensive compared to M3, National Debt, government expenditures, the Dow and gold.
Could the long-term trend in metals be about to change?
The gold/silver ratio (the price of gold divided by the price of silver) has touched 80 a few times over the past 25 years but the number of days one has been able to buy silver while the ratio is above 80 has been few and this is calendar days, not trading days. This is highly actionable information.