Gold Stocks Forecast – Why A Mega Gold Stocks Rally Is Imminent – Must Read!

Gold Stocks Forecast:

During the Great Depression, at a certain point, gold stocks started a massive rally. While most things were going down in price, gold stocks made significant gains, becoming one of the best performing sectors during that time. Below is a chart (from sharelynx.com), which illustrates the performance of the gold stocks during this time:

It would seem that some stocks were going up as much as 300% and more, within a 1 to 2 year period. It was no coincidence that gold stocks performed as well as they did. Like all goods, gold stocks will thrive under the ideal conditions. During the Great Depression those ideal conditions, perfect for a gold stocks rally, were present.

I have done some research, to establish what those ideal conditions are. Based on my findings, it is clear that massive gold stocks rallies follow a peculiar pattern of events and conditions. The pattern of events and conditions during the Great Depression is the prime example of this.

I have also found that the conditions today, are very similar to that of the Great Depression. Today, the pattern of events prior to the great gold stocks rally during the Great Depression, are playing-off in a similar manner. Based on my research, it is clear that a massive rally in gold stocks, like that of the Great Depression, is imminent.

During the 1920s there was a massive rally in the Dow, driven by the expansion of the money supply. This rally came to an end, when the Dow peaked in 1929 (also the Dow/gold ratio), followed by a severe crash. This set off a series of events and conditions, eventually leading to the massive rally in gold stocks.

The Dow peaked in 1999 (also the Dow/gold ratio) and in 2007, with a big crash from October 2007 to March 2009. This came after a huge rally in the Dow, since at least 1987. In a similar manner this has set off a series of events and conditions that will lead to a historic rally in gold stocks.

One of the peculiarities during the time of the Great Depression was the initial underperformance of South African gold mines during the first phase of the Depression. While the price of the US goldmine: Homestake, was increasing since 1929 already, the South African gold mines were still caught in a downward trend, from about 1927 until 1932 (see chart above). When the South African gold mines finally did start rallying in 1932, they outperformed.

Today, we have a similar situation as illustrated by the following chart (from finance.yahoo.com):

The chart compares the HUI to three South African gold mines: Harmony (HMY), DRD (or DROOY) and Gold Fields (GFI). You can see that South African gold mines have significantly underperformed since 2000, just like they did during the period of 1929 to about 1932.

This underperformance, I belief, was mainly due to the down trend in the US dollar/SA Rand exchange rate. It appears that this condition is about to change, with the South African gold mines outperforming most other gold mines, just like they did from 1932 during the Great Depression.

Below is a long-term chart of the JSE Gold Index (in ZAR):

I have done some fractal analysis on the chart, by indicating two patterns that appear similar. I have indicated 5 points on both patterns to illustrate how they are similar. If the bigger (current) pattern continues in a similar manner like the smaller pattern, then we are in for huge rally. This is consistent with analysis I have done for the ZAR gold price, US dollar gold price, HUI, XAU and GDX.

I have prepared a report: Gold Mining Special Report, which highlights the ideal conditions for gold stocks to rally. The report also covers Fractal Analysis of the HUI, XAU and GDX with usable targets for these indices. This is an extremely useful report that should help the reader to benefit from the coming gold stocks rally. The report is $50 ($30 for subscribers of my premium service), and I believe it will prove to be worth every dollar.

For a good preview of the report, see this video.

 

Warm regards and God bless,

Hubert

hubert@hgmandassociates.co.za

http://hubertmoolman.wordpress.com/

Visit my Youtube Channel for my video updates on gold and silver

“And it shall come to pass, that whosoever shall call on the name of the Lord shall be saved”

Silver Update

Today, I am making my premium silver update available to all my subscribers. I trust that you will find it useful, and will consider to subscribe to my premium service. It is only $10 per update, and no long-term commitment.

The update follows:

Silver Update

by Hubert Moolman

14 October 2011

In a previous update on silver, I illustrated the high correlation between how gold and silver trades. Importantly, how they trade similar, at similar milestones, despite the fact that those milestones might be reached at different times.

The similar milestone that is relevant for silver’s current and immediate future is of course the 1980 high. Gold made a triangle-type pattern just before it reached the 1980 all-time high. When it came out of that triangle pattern, it rallied strongly to the 1980 high, which started the formation of a flag-type pattern. From the flag pattern, price shot upward to the $1000 level (pass the 1980 high).

Silver is still following the pattern of gold, around its 1980 high, with the exception that, its down-side action is “deeper” than that of gold. The depth (its fall to $26) of the pattern that started forming since it reached the 1980 high again, is deeper ($30 was the deepest that I expected) than what I had anticipated, based on gold’s pattern. However, this appears to have been just a flash crash (provided we do not go there again).

Below is the silver chart:

On the chart I have highlighted the 1980 all-time high. You will see the big triangle type pattern just like one that formed on the gold chart (refer to the 15 June silver update). Out of the triangle it rallied strongly to the 1980 high (just like gold did). After reaching the 1980 high, it fell back, and appears to be forming the flag-type of pattern just like gold did.

The current pattern on the silver chart is in fact a highly bullish pattern. It is consistent with that which forms right before price goes parabolic. However, this type of pattern is also similar to that which forms just before we have a severe decline. That, I believe, is the reason why opinion is always divided before one sees a huge rise in price. This is illustrated below, on the silver chart:

The chart is self-explanatory. As you can see, we are at a major crossroads. We will either have a massive rise in price, or a major fall. In order to be able to make the right decision, we have to look at two important things.

1. Context – Are the context in which the two patterns exist similar? Let us see. This is a very difficult one, far difficult than the similar one I was faced with when gold was in a similar position in July 2010. The top that was formed at point 1 in 2008 was a major top. Silver had been rallying for more than 5 years until then. Is the top at point 1 in 2011 a major top? I cannot say for sure. It could be, however, it came about 8 months after a huge (almost 30 month) deep consolidation. The first top came about 6.5 months after an almost 15 month consolidation. Given that the length of rallies are often relative to the size of the consolidation, one would expect a major top to only arrive much later than the top in 2011. At least another 5 months later, based on the pattern of the 2008 top. The 2008 top came at a time when there was a big aversion to risk. The current conditions are similar. However, there is case to be made for the fact that precious metals could now move contrary to the general market (as gold has mostly done since July 2011) during this risk-aversion episode, because it is the monetary system that is now at question. This could especially be true due to the crisis now being more about sovereign debt compared to 2008. I will stop here regarding context, but just conclude and say that I am biased towards believing (because of this and all previous analysis) that the context of this 2011 top is different to that of 2008, and suggests that the pattern will follow the green path instead of the red. We still have to look at confirmation standards before making a final decision.

1. Confirmation standards – Based on the look of the two patterns it appears that the $33.55 and the recent low of $26 dollar are the two key levels. A break above the $33.55 level might suggest that the pattern is following the upward parabolic path, whereas a fall below the $26 level suggests we will follow the red path and have a dreadful fall. If we break above the $33.55 level, which I believe we will, we still have to break out of the flag indicated in the first chart. It also eventually has to go through the yellow line indicated on the first chart.

Conclusion

We are at a crossroads, and have to be watchful. Despite the fact that all my analysis suggests that silver should go higher, much higher, we still have to be watchful and pay close attention to the confirmation standards. Key resistance levels could be $40, the yellow line in the first chart and then $55 dollars. Interim targets could be $70 and then $90.

I have prepared a report: Gold Mining Special Report, which highlights the ideal conditions for gold stocks to rally. The report also covers Fractal Analysis of the HUI, XAU and GDX with usable targets for these indices. This is an extremely useful report that should help the reader to benefit from the coming gold stocks rally. For more information on the report see this article. The report is $50 ($30 for subscribers of my premium service), and I believe it will prove to be worth every dollar.

Warm regards and God Bless,

Hubert

http://hubertmoolman.wordpress.com/

hubert@hgmandassociates.co.za

P.S. Feel free to forward

Silver At A Major Crossroads

For the commentary on this chart, as well as to find out which way the silver price is likely to go, subscribe to my premium service.

Warm regards

Hubert

Gold Signals The End…By Hubert Moolman

Gold remains our best means of economic measurement. It is not a perfect or 100% consistent measure of wealth, but it is our best. Due to its monetary properties, gold can be used to measure wealth across generations. Just like we have the sun and moon to discern the times and seasons, I believe, we have gold to discern changes in wealth. It is interesting that the sun is often compared to gold, and the moon to silver. Just like a day in the Middle Ages is comparable to a day in this century, an ounce of gold in the Middle Ages is comparable to one today.

Currently we use fiat currency, like the dollar, for economic measurement. However, this creates a huge distortion due to the fiat currency being highly unstable. Can you imagine what would be the effect on our planet if we did not use the normal cycles that the sun and moon provides us with? Our ability to produce food for example, could be severely disrupted, leading to famine or possible extinction of mankind.

By using a highly unreliable measure like the US dollar, our ability to make proper economic decisions is severely impaired, since we (the common man) are not easily able to distinguish between a real increase or decrease in wealth , for example. This causes a great misallocation of wealth and will lead to a severe economic depression.

When you look at a chart of the average day’s wages in dollars compared to the average day’s wages in gold ounces, with some analysis, you will understand why the dollar cannot be used as an economic measure. These charts show that the average daily wage for Americans, have gone from about $20 in 1964 to about $152 in 2010, whereas in gold it has fallen from just short of 60% of an ounce  of gold in 1964 to just 12,67% of an ounce of gold in 2010.

Gold is telling us that people are now earning less money than they did in 1964, whereas the dollar is telling us the opposite. Which measure is telling the truth?  This bizarre situation is evident in our “economic” and “accounting” language, when we talk about a real and nominal increase in prices. An example would be when an economist tells you that house prices have increased in nominal terms, but decreased in real terms. What? How can something go up and down at the very same time? Using a proper measure, there would be no need to have a “nominal” as well as a “real” analysis.

These bizarre and illogical concepts in our economic language are as a result of the bizarre measure of value called fiat money. We have to look at the right signs to discern the times. I prefer to look at the “behaviour” of gold to discern the economic times.

What is gold’s “behaviour” telling me?

Gold Rallies and Debt

Since 1900, we have had three major rallies in the gold price. The first started during the Great Depression, the second since about 1968, and the current since about 2001. Note, the gold price went up during the Great Depression, since most things as measured in currency (gold) depreciated. Further to that, in 1933, due to increased demand, the gold price was increased from $20.67 to $35. During the first two rallies, there were major economic declines. The economic decline during the Great Depression was much worse than that of the 70s. This is mostly due to the difference in debt levels during the two periods. The debt level during the Great Depression was far greater than that of the 70s. The greater number of defaults, due to the bigger debt, took a bigger chunk of value out of the economy.

The current gold rally is still in progress. Debt levels now are greater than during both the previous major gold rallies. It is believed that in 2008, total debt as a percentage of GDP in the US stood at more than 340% compared to 265% during the Great Depression. At some point during the Great Depression, debt levels collapsed, causing a major economic decline. The rally in gold is a way reflection of how debt levels collapse. The current major rally in gold is thus telling me that we are likely to have an economic decline far greater than that of the Great Depression, in the US and most parts of the world. This economic decline has already started, and is about to intensify.

New Monetary Order

In 1933, Franklin D. Roosevelt changed the monetary order in the US, with Executive Order 6102. Fundamentally the dollar changed its nature due to this order, and was therefore no longer backed by gold – for US citizens.  As mentioned earlier, this and the revaluation of gold was done, due to the increased demand for gold. The principle is: people became aware that there were far more claims on gold (read dollars) issued than the gold available, and therefore demanded their gold. This was mainly the result of the increase in credit during the 20s. As explained above, this run to real money (gold) is basically the flip side of the contraction of credit or debt.

So, the revaluation of gold was done to halt or slow the debt contraction, with those who handed their gold to the government, paying the bill for this decrease in debt contraction. Also, it prevented the banking system from leaking more gold, due this increased demand for gold. The system was recharged, and ready to go, as we know, for another 38 years.

The late 60s to early 70’s (start of the second gold rally) brought the same problem, however, this time it was sovereign nations that became aware that there were far more claims on gold (or dollars) circulating than the gold that the US had available. Some nations requested their gold because of this fact, and the US banking system was once again leaking gold like it did during the Great Depression.

Like in the 30s, the US knew that it would not be able to deliver the demand for gold, due to this “gold run”, and it therefore decided to close the “gold window”. Just like the US citizens, nations could no longer exchange their dollars for gold. This stopped more gold from leaking out of the US reserves, and the system was yet again recharged. The bankruptcy of the US was now well hidden, and it seemed like the perfect con. No more demand for gold from neither citizens nor sovereign nations that might expose the bankruptcy (too many dollars), too few ounces of gold.

Dollar could now be printed without any accountability to those users of dollars (basically the whole world). They have done it: the perfect con.  Or have they?

No, there might be no one that will be able to bring the bankruptcy to light, due to the seemingly faultless plan; however, it is the natural laws that will bring this con to an end.

How? Debt levels are once again at historically high levels. The level of debt that this system can carry is limited. The level that it is limited to might not be known, however, one can look at natural laws in order to estimate a possible limit. It is my believe that the natural cycle (limits) for these type of systems (man-made systems) are linked to the human cycles of 40 years , 70 years and 80 years, as per the Holy Scripture.

The period of 40 years is associated with middle age, judgment, as well as a generation. The period of 70 years is associated with a life-time and judgment. The period of 80 years is associated with an extended life-time, two 40 year periods and also judgment.

The history of this dollar monetary system appears to follow these natural cycles with an almost scary accuracy. From the period of the Great Depression (gold revaluation) to Nixon closing the gold window is more or less 40 years. That is the period of 1929 to 1933 to 1971.

The period from 1929 peak in the Dow – when the stock market crashed, as well as the peak in the Dow/Gold ratio – to 1999 when the stock market made a peak (1^st of 2 peaks), and the Dow/Gold ratio peaked, is 70 years. Remember, the Dow/Gold ratio is a significant indicator of the extent to which claims on real assets exceed the actual real assets; therefore, it is an extremely important signal when determining turning points in the current fiat money system.

The year 2014 will be 70 years since the Bretton Woods agreement that brought about the current monetary system, with the dollar as reserve currency. This is how the relationship with the US and the gold of other nation states in the US came about.

We are already in the period that marks 80 years since the Great Depression. The year 2013 will mark 80 years since the 1933 gold revaluation. It is currently 40 years since the closing of the gold window.

The point here is that the natural cycles appears to be very relevant to this man-made monetary system, and that it is very likely that we are extremely close to the end.

The end of the monetary system is likely to come before a peak in gold, if by decree (creation of a new monetary system), but still forced by natural law. If the system is ended by natural law, then it is likely to come at the peak in gold or after. The peak in gold I refer to is gold as measured against other real assets (not paper money).

Another possibility to keep in mind is the fact that gold could also be outlawed by most governments. I am not saying that this will happen, however it is a possibility, and should be watched for. If this comes to being, I believe we have entered the period when this might happen.

Again, the nature of gold allows us to keep track of the times and seasons of this corrupt system, by studying the behaviour of gold.

Gold Fractal Analysis

Based on the above analysis and long-term fractal analysis, it appears that we are close to a top in gold (in terms of fiat currency and real assets). However, let this not confuse you to think that we are close to a top in the price of gold in terms of the dollar or other currency amount.

We are close in terms of time (as early as the end of 2012 to the beginning of 2013), but $ 1920 is not close to $10 000, should $10 000 be the peak in the gold price, for example. It is also likely that gold will not have a peak in fiat currency as such, but instead, just discontinue trading in fiat currency. That means we might come to a point where gold will only be exchanged for real assets.

Below is a 38yr gold chart (thanks to goldprice.org):

I have done some fractal analysis on this chart. I published this analysis the first time when gold was well under $ 1200 dollars. The fractals indicated have astonishingly continued to keep its similarity as we have progressed during this gold bull market.

On the chart I have indicated two patterns marked by the numbers 1 to 3. The first pattern (fractal) forms a small cup between 1974 and 1978, compared to the second pattern which forms a big cup between 1980 and 2008. If the bigger pattern continues it similarity to the smaller pattern, then the parabolic (based on a long-term scale) move in gold should continue, taking gold to multiples of the current price. I have indicated the point in the 70s that is similar to point where we are at now.

What I wanted to highlight here is the fact that according to my fractal analysis, it appears that gold has reached a critical point where it is expected to rise really fast. Also, this analysis suggests that we could peak as early as the end of 2012 to 2013, and we should as a minimum reach $ 4000 by then. This is consistent with the above analysis regarding gold and the monetary system.

Please note, the above fractal analysis is just a very big picture analysis, as well as a simplistic analysis prepared for this article. One has to also look at the context in which both patterns exist as well as look at confirmation standards.

My premium subscription service and long-term fractal analysis report provides more usable information regarding the price of gold and silver. Please contact me for details as well as a free current edition of my premium service.

Other Important Points

I believe there are enough signs that indicate that we have entered a period where we should expect the worst. We should thus prepare for the worst, with the hope that we would be able to cope with whatever comes our way.

Due to the great probability that the fiat money system might come to an end soon, it is not desirable to exchange physical gold and silver for fiat money. Where possible it is better to exchange them for real goods and services and productive assets.

An economic depression is virtually assured due to the bankrupt monetary system as well as the extreme debt levels.

For more analysis, subscribe to my blog or premium service.

I have prepared a report: Gold Mining Special Report, which highlights the ideal conditions for gold stocks to rally. The report also covers Fractal Analysis of the HUI, XAU and GDX with usable targets for these indices. This is an extremely useful report that should help the reader to benefit from the coming gold stocks rally. For more information on the report see this article.  The report is $50 ($30 for subscribers of my premium service), and I believe it will prove to be worth every dollar.

Warm regards

Hubert

hubert@hgmandassociates.co.za

http://hubertmoolman.wordpress.com/

Visit my Youtube Channel for my video updates on gold and silver

“And it shall come to pass, that whosoever shall call on the name of the Lord shall be saved”