Gold Price Forecast: Gold Signals The End Of This Monetary Era

Gold Signals The End Of This Monetary Era

By Hubert Moolman

13 October 2015

Gold remains our best means of economic measurement. It is not a perfect, 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 provide 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 US GDP in US dollars, then it tells you that the US economy has been growing almost consistently – see below: Real GDP (inflation adjusted GDP) from US. Bureau of Economic Analysis:

fredgraph 2

It also tells you that the US economy is about eight times bigger than it was in 1947.

If you measure GDP in gold terms, see below – GDP as measured in Billions of gold grams (from PricedinGold.com):

gdp-1930

Then, it tells you that GDP is in a massive downward trend since 2001. It also tells you that the US economy is only about twice the size that it was in 1947. In fact, it tells me that it is very likely heading to Great Depression levels and lower.

The same can be said for wages. When you look at any chart of US wages in dollars, it would show that wages are consistently going up, and are multiples higher of levels 60 or more years ago. Below, are two wages charts as measured in gold (again from PricedinGold.com):

minwage-1930

wages-1965

Again, these charts as measured in gold tell a completely different story. Wages are almost at the lowest it has been over the last 70 years.

Gold allows us to keep track of the times and seasons of this corrupt system, by studying the behaviour of gold. Previously, I have shown how based on a gold measurement; it is very likely that the current monetary system will come to an end soon:

gold-to-monetary-base-ratio-2015-09-29-macrotrends

The chart (from macrotrends.com) that shows the ratio of the gold price to the St. Louis Adjusted Monetary Base back to 1918. That is the gold price in US dollars divided by the St. Louis Adjusted Monetary Base in billions of US dollars. So, for example, currently the ratio is at 0.28 [$1 125 (current gold price)/ $4 019 (which represents 4 019 billions of US dollars)].

So, essentially this is a measure of the gold price relative to US currency in existence. This ratio is at an all-time low (extreme). Every time after it had reached an all-time low, based upon the patterns indicated (see point 3 in 1970 and 1932), we had a change in the monetary order.

The holders of gold obligations (US dollars) paid the price for the system reset, by getting less gold for their US dollars [1 oz for $35 instead of 1 oz for 20.67 in 1934 and 1 oz for $35 plus (up to $850)
instead of 1 oz for $35 after 1971].

After, this confidence in the system remained, and it could continue, without the perpetrators being held accountable or losing anything. Will the system continue this time as it did before, or will confidence in it forever be lost? Will the perpetrators live another day to continue their debt-based monetary system?

For more of this kind of (fractal) analysis on silver and gold, you are welcome to subscribe to my premium service. I have also recently completed a Long-term Silver Fractal Analysis Report .

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

Silver Price Forecast: Silver and the Bond Market Collapse

Silver Price Forecast: Silver and the Bond Market Collapse

Debt is at the root of money creation in this debt-based monetary system. In fact, as the name suggests, money is debt in this system. Historically, instead of debt as money, there would have been gold or silver.

Gold is still somehow linked to the monetary system, albeit in a very small way, as can be seen by the fact that many central banks own gold as part of their reserves. Silver, on the other hand, has been completely eliminated from the monetary system.

Given the above, it should be clear that silver and debt are virtually complete opposites, within this system. This is evident in the fact that silver and bonds have historically moved in opposite directions. If silver is going up, then bonds are going down and vice versa.

Alternatively (because the interest rate on a bond moves opposite to the price of the bond), when interest on those bonds are going up, then silver is going up, and vice versa. So, interest on bonds moves together with the silver price (as previously explained).

Below, is a chart of interest on 10 – year treasury bonds, since 1900:

correlation between silver and interest rates

correlation between silver and interest rates

The blue is the actual interest rates movement, whereas, I have indicated (in grey) how the price of silver has moved almost in union with the interest rates over the long-term.

Interest rates is in a way an indication of the value that the market places on debt (or bonds).

If interest rates are low, then the market places a high value on debt, and if the interest rates are high, then a low value is placed on debt. Therefore, when interest rates are low, the market is putting a low value on silver, and when interest rates are high, then the market is putting a high value on silver.

So, if silver is going to come into its own, there would have to be a collapse of the debt markets, especially sovereign bonds, while the silver price is rising. This has not happened yet. Yes, silver has been rising since about 2001, although the interest rate trend has been down. However, it has risen mostly because negative real interest rates have been present.

Economic decline is the trigger that can bring a change in the prevailing interest rate trend (or bond price trend). When there is economic decline, there is reduced expectation that debts will be paid (This is why the stock market collapse is such an important signal for the coming silver rally). Debt is then considered very risky, so higher interest rates are required.

Today we have gigantic debt levels, which will never be paid. Given the size of these debt levels relative to the size of the economy; there is no way that the bond markets could handle a change in the interest rate trend to the upside. This interest rate trend change to the upside will come; therefore, the bond market will collapse, and silver will rise in value and to its role as money.

For more of this kind of analysis on silver and gold, you are welcome to subscribe to my premium service. I have also recently completed a Long-term Silver Fractal Analysis Report .
Warm regards

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

Silver Price Forecast 2015: Get Your Physical Silver…Dow About To Crash Like October 1929?

Silver Price Forecast 2015:

Dow About To Crash Like October 1929? Got Physical Silver And Gold?

Significant nominal peaks in the price of silver tend to come after significant nominal peaks in the Dow. This has been the case for the last 100 years at least.

It is no coincidence that significant silver rallies follow after significant Dow rallies end, as I have explained before. It is simply a natural reaction to what caused the stock market rally as well as the effects of that rally. So, if it happened before, it will certainly occur again.

These stock market rallies are driven by the expansion of the money supply, causing a big increase in value of paper assets (including stocks) relative to real assets. When the increase in credit or the money supply has run its course, and is unable to drive paper price higher; value then flees from paper assets to safe assets such as physical gold and silver, causing massive price increases.

We may have reached such a point in time:

Dow to crah like October 1929

Dow to crash like October 1929

Above, is a fractal comparison between the current period (1998 to 2015) and the 1920/30s, for the Dow (charts from tradingview.com). Follow the two patterns marked 1 to 5. I have also indicated where silver peaks and bottoms occurred, to show that both patterns exist in similar conditions. This means that there is a strong likelihood that the crash will occur.

If the Dow peak is in (at point 5), then it could free fall soon, much like the October 1929 crash. This could be the greatest Dow crash ever. Therefore, the greatest silver rally could be on its way.

For more of this kind of (fractal) analysis on silver and gold, you are welcome to subscribe to my premium service. I have also recently completed a Long-term Silver Fractal Analysis Report .
Warm regards

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

Not Enough Gold To Pay All Holders Of Gold Obligations

Gold Price Forecast: Not Enough Gold To Pay All Holders Of Gold Obligations

by Hubert Moolman

29 September 2015

It is often reported that governments and central banks have for years leased or sold their gold to bullion banks; therefore, they are unlikely to possess the tons of gold, they are said hold. Also, the bullion banks seem to be under enormous pressure recently. Just look at the recently reported spike in the gold coverage ratio on COMEX, with, there being over 200 ounces of paper gold claims for every ounce of deliverable gold (as reported on zerohedge.com)

This made me think of whether there is a pattern visible on the charts that could link the current physical gold shortage to the famous gold shortages of the 30s and 70s. During those famous gold shortages, there were gold promises/obligations in existence that would never be settled. They have still not been settled, and have been instrumental in pushing gold prices much higher.

Below, is a chart (from macrotrends.com) that shows the ratio of the gold price to the St. Louis Adjusted Monetary Base back to 1918. That is the gold price in US dollars divided by the St. Louis Adjusted Monetary Base in billions of US dollars. So, for example, currently the ratio is at 0.28 [$1 125 (current gold price)/ $4 019 (which represents 4 019 billions of US dollars)].

Gold to Monetary Base Ratio

Gold to Monetary Base Ratio

Historically when this ratio was going down, then there are more claims on gold than what was actually being held by the Federal Reserve or US Treasury (for more on this ratio). At some point after the ratio is going down there would be pressure to fulfill gold obligations due to the shortage of physical gold compared to claims on gold. This pressure often comes after a significant change in conditions such as after a stock market peak. Just like financial fraud is often discovered when business is slow, as was possibly the case with Bernie Madoff.

On the chart, I have indicated the three yellow points (a) where the Dow/Gold ratio peaked. These all came after a period of credit extension, which effectively put downward pressure on the gold price. Points 2 were placed just to show the similarities of the three patterns.

After the peak in the Dow/Gold ratio and point 2, the Gold/Monetary Base chart made a bottom at point 3 on each pattern. It is at these points that the monetary base could not expand relatively faster than the gold price increased. Today, this could mean that the point at which the game is up for those who are short gold.

I do not know if point 3 is in on the current pattern; however, given the fact that the bullion banks are under pressure as indicated in the spike in the gold coverage ratio at the COMEX, it might well be.

In 1933, after point 3 was in, the gold confiscation order was passed (point b). This came about due to the pressure to fulfill gold obligations. This was confirmed later by Roosevelt when he justified Gold Reserve Act 1934 by saying that, “Since there was not enough gold to pay all holders of gold obligations, . . . the federal government should expropriate and keep all of the gold”

Again in 1971, after the relevant point 3, due to being unable to cover all the foreign holdings of US dollars with the related amount of gold, the US suspended (really ended) the convertibility of the US dollar into gold, on 13 August 1971 (point b).

So, after point 3 is officially in on the current pattern, we could possibly expect a point b at which a major event in the gold or/and bond market could happen. When this event happen, it might be too late to add to your gold or silver position. It will also prove that gold and silver is still relevant as monetary assets.

For more of this kind of (fractal) analysis on silver and gold, you are welcome to subscribe to my premium service. I have also recently completed a Long-term Silver Fractal Analysis Report .
Warm regards

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

Silver Price Forecast 2015: The Massive Debt Bubble Will Push Silver Prices Much Higher

Silver Price Forecast 2015:

The Massive Debt Bubble Will Push Silver Prices Much Higher

Silver had a spectacular rise in price from about August 2010 to April 2011. In fact, it was so impressive that some thought the peak was the end of the bull market for silver. After all, silver had risen about 12.33 times from its bottom in 2001.

However, from the fact that the April 2011 did not surpass the all-time high of 1980, it should have been evident that this was no end of a bull market. Real bull markets form peaks much higher than any previous highs.

Take the Dow’s bull markets as an example. It went from 41.22 in July 1932 to 1067 at the beginning of 1973. That is a 40-year bull market where the Dow increased 25.89 times in value. The peak of that bull market (1067) was multiples higher than the previous all-time high (381.17 in 1929).

Again, the current Dow bull market peak (18 312 – current peak) came 40 years after the Dec 1974 bottom (570). This is a 32.13 times increase in the value of the Dow, and again; the peak is multiples higher than the previous all-time high (1067 in 1973).

Below is a comparison of silver’s current bull market and the previous one:

Silver bull markets compared

Silver bull markets compared

On the above graphic (charts generated at barchart.com), the bottom chart is the current silver bull market from 1999 to 2015, compared to the bull market of the 60s and 70s, the top chart. The previous bull market in silver was about 14 years long, from a peak in the Dow/Gold ratio to the bottom in Dow/Gold ratio. The current bull market is 16 years, from the peak in the Dow/Gold ratio to now.

The current bull market is bigger than the previous bull market in terms of price movement and time. During the previous bull market, silver made an interim peak that was about 5.17 times higher than the low in 1971. I believe that the April 2011 high in silver is in a similar manner the interim peak for this bull market. The April 2011 peak was 12.33 times higher than the 2001 low, which means that the current bull market appears much stronger than the previous one. Reasons for this were previously explained.

The previous bull market high was 38.58 times higher than the low of that bull market. The current bull market high can potentially exceed the 38.58 times, given the factors that favour a better silver performance during this bull market.

The April 2011 peak of this bull market, exists in very similar conditions to that of the interim high in the previous bull market, as illustrated in a previous article. This makes it very probable that we will see a rally in silver over the next several years, similar to the 1979 to January 1980 rally.

In my view, the silver price will, as a minimum, equal the 38.58 times rise of the previous bull market. That would give us a minimum target of $155.86 (4.04 times 38.58). The context of this silver bull market and the massive debt levels today, suggest that silver will go much higher.

For more of this kind of analysis on silver and gold, you are welcome to subscribe to my premium service. I have also recently completed a Long-term Silver Fractal Analysis Report .

Warm regards

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

Silver Price Analysis: Silver and Interest Rates

Silver Price Forecast:

Historically silver and Interest rates have actually moved together. When interest rates are going up, then silver is going up. When interest rates are going down, silver is going down.

For more of this unique fractal analysis on silver and gold, you are welcome to subscribe to my premium service. I have also recently completed a Long-term Silver Fractal Analysis Report.

Warm regards

Hubert

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

Silver Price Forecast 2015: Silver’s Route to $50 and Beyond

Silver Price Forecast:

The Dow has been the biggest obstacle to a rise in precious metals, due to it sucking up a lot of the available value on global markets. There will be no significant silver and gold rally while we have a rallying or a “close to its high” Dow.

The Dow is up about 2.52 times from its low during the 2008/2009 crash. Based on the fact that silver has its great rallies when the Dow is weak (see here); it is no surprise that silver’s performance during roughly the same time has not been what is expected during a bull market. Silver is only up about 1.7 times from its low in October 2008.

For silver to rise significantly from here, value will have to be diverted away from those other competing instruments, like the Dow. The Dow’s price movement during the last two weeks of August might be signaling the beginning of value diverting from debt fueled assets (like the Dow) to silver.

Sometime during the Dow’s next leg down, there is likely to be a significant silver rally, which would take silver higher than the April 2011 high. With the Dow and commodities like oil and other metals not being particularly desirable, we have perfect conditions for such a silver rally.

There are fractals (or patterns) on the silver, and Dow charts that suggest that the above scenario could happen soon.

Below, is a fractal comparison between the current period (1999 to 2015) and the 60/70s, for the Dow (charts from barchart.com):

Dow 70 s Fractal

Dow 70 s Fractal

Dow current fractal

Dow current fractal

The top chart is the Dow from 1966 to 1974, and the bottom one is the Dow from 1999 to 2015. I have illustrated how these patterns are alike by marking similar points from 1 to 5. It appears that there is a very good chance that we have finally reached the peak for the Dow (point 5).

If the current pattern continues to follow the 60/70s pattern, then we would see a major decline of the Dow in the next several years. This is a good picture of the medium to short-term situation that the Dow finds itself in – right after an all-time high and just before a major decline, like in 1973.

In 1973, soon after the Dow peaked, gold and silver started a massive rally; therefore, it appears that then, the Dow was also an obstacle preventing a silver and gold rally. The silver chart since 1999 also has similarities to that of the 60/70s era.

Below, is a fractal comparison between the current period and the 60/70s, for silver (charts from barchart.com):

Silver 60/70s fractal

Silver 60/70s fractal

Silver current fractal

Silver current fractal

On both charts, silver made an all-time high peak some time after the Dow and Dow/Gold ratio peak (1966 and 1999 respectively). During the 60/70s period silver had a multi-year decline after the all-time high. This formed some kind of flag-type pattern. Sometime after the Dow peak (point 5 on the Dow chart), silver went higher than the all-time high.

On the current silver chart, silver is still in the midst of its multi-year decline, forming a flag-type pattern. If these comparisons stay consistent, then we would see silver go higher than the all-time high (April 2011 high), within the next couple of years – provided that the Dow has made its all-time high peak.

For more of this kind of analysis on silver and gold, you are welcome to subscribe to my premium service. I have also recently completed a Long-term Silver Fractal Analysis Report .

Warm regards
Hubert

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

Silver Price Forecast 2015: Silver and Deflation

Silver Price Forecast 2015: Silver and Deflation

How does silver perform during deflation? Which is better during a deflation – silver or gold? The answers will depend on quite a few things as well as what definition of deflation one uses.

If you look at monetary history, then you will find that we have moved from periods where mostly real or tangible assets like gold and silver acted as monetary claims on goods and services in the economy, to today where mostly credit or debt claims (fiat currencies like the US dollar) act as monetary claims on goods and services. Therefore, we have moved from a real asset-based monetary system to a debt-based monetary system.

There can be inflation or deflation in both systems; however, they are much more limited and “natural” in a real asset- based monetary system. Moving from a real asset-based monetary system to our current debt-based monetary system has in itself been massively inflationary.

If we had to revert to the real asset-based system, by settling or liquidating debt-based monetary claims (decreased money supply), then we would have a massive deflation. In fact, that is what is happening when asset prices get overvalued, due to excessive credit, and the system seeks to find equilibrium via a contraction of economic activity.

Historically (pre 1870s) when we had a mostly asset-based monetary system, where both silver and gold were considered monetary claims; the Gold/Silver ratio traded much lower than 20. So, if we had to have deflation today, which forces us back (total system reset) to a real asset-based monetary system (primarily gold and silver), then we would likely return to a Gold/Silver ratio of about 20 or lower. In such a case, silver would obviously outperform gold, since the ratio today is in excess of 70.

Most astute gold investors know that gold performs well under a deflationary environment. Historically, gold mostly outperforms silver at the beginning of a deflationary period, while silver outperforms gold towards the end, and mostly usually (during the whole deflationary period). So, although surprising to most, silver actually performs very well during deflation.

It is important to note that every good has conditions that are unique. This is true even in the case of gold versus silver. Although, they are are so similar in nature (and trade very similar), they have different monetary histories. So, at a certain time they could trade very different, due to where they are in their own particular cycle.

The period of the Great Depression was a good example of this, since at that time silver was almost fully demonetized while gold was not. Generally, this is one reason why one would not necessarily get only falling prices in a deflation, or only rising prices during inflation.

The fact that one does not necessarily get only falling prices during a deflation complicates this kind of analysis. For example, many would consider the 70s to have been a deflationary period, yet the CRB index tripled from 1970 to 1980. To simplify matters, I consider the Dow/Gold ratio chart a very good proxy for deflation or inflation. When the ratio is rising, you have inflation, and similarly, when it is falling you have deflation.

Below, is a long-term Dow/Gold ratio chart (from macrotrends.net):

Dow/Gold Ratio Chart

Dow/Gold Ratio Chart

September 1929 to February 1933

The period from September 1929 to February 1933 was a deflationary period. The stock market was crashing, as well as the prices of most commodities. Gold was fixed at $20; however, there was extreme pressure to increase that price. The London Fix actually rose during this time. Silver fell from 53 cents in 1929, to 28 cents in 1932. It started to rise in 1933, so that it was at 35 cents by February 1933. So, during this time gold outperformed silver.

January 1966 to Jan 1980

The stock market peaked in January 1966. The period from 1966 to January 1980 was a deflationary period, although commodity prices actually rose. The Dow did even make a higher high in 1973, but the trend was definitely down during this whole period. Although the overall trend was deflation, there were some inflationary periods in between (like from the end of 1974 to August 1976).

During this whole period, gold went from $35 to $875 (25 times), whereas silver went from $1.30 to $49 (37.7 times). This time it was silver that outperformed gold comprehensively. Unlike the Great Depression, silver actually rose during the first part (Jan 66 to May 68) of this deflation. Gold actually outperformed silver for most of this 14 year period. However, the last 12 months from Jan 1979, silver was brutal and nullified the 13 year lead gold had had.

August 1999 to Now

The period since August 1999 has been deflationary, although the Dow and most commodities have been rising for significant periods during the same time. It is interesting to note that the CRB index is currently retesting its 1999 lows (it is likely to go much lower). The Dow is following a very similar part to the 60s and 70s deflation. It has made higher highs since 1999, but will eventually end up much lower than its 1999 high, when this deflation is over. In fact, I believe that the Dow will go much lower than its 2009 low, before this deflationary period ends.

Now, one might not believe that the Dow/Gold ratio is a good proxy for deflation or inflation, but in a few years when the Dow is at extreme lows one certainly will.

From August 1999 to now, gold has actually outperformed silver (this is very similar to the 60s and 70s deflation). The Gold/Silver ratio was around 50 in August 1999, today it is around 74. This is great news for silver’s performance during the rest of this deflation. Silver relative to gold is currently better value than at the beginning of this bull market. Just like in the last year of the 60s and 70s period, silver will brutally outperform gold over the remaining period of this deflation.

For more of this kind of analysis on silver and gold, you are welcome to subscribe to my premium service. I have also recently completed a Long-term Silver Fractal Analysis Report .

Warm regards
Hubert

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

Silver Price Analysis: Silver’s Ultimate Rally and Signs to Exit

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For more of this unique fractal analysis on silver and gold, you are welcome to subscribe to my premium service. I have also recently completed a Long-term Silver Fractal Analysis Report.

Warm regards

Hubert

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

Silver Price Forecast 2015: Silver Set To Start 70s Style Rally?

Silver Price Forecast 2015

In terms of gold, silver is currently better value than at the beginning of the bull market in 2001. In November of 2001, when silver bottomed, the Gold/Silver ratio was about 66 compared to 78 today. In other words, gold has actually outperformed silver since the beginning of this precious metals bull market.

It is actually the historical norm for gold to outperform silver for most part of a bull market, except for the very last part. For example, this happened in the 70s, when gold was up on silver from the beginning of the bull market (let’s say about 1971) until almost the very end (about October 1979). So, during an almost ten-year bull market, silver only overtook gold about three months before the end.

The structure of the current silver bull market has a lot in common with the 70s one. However, there are also some differences, which actually favour a stronger silver performance during this bull market. One important difference that favours silver this time around, which I dealt with in a previous article, is the fact that the current silver bull market started at a much different and more favourable time for silver as compared to the 70s bull market.

This bull market actually started after or closer to the Gold/Silver ratio reaching an all-time high level (in terms of time and the ratio value) as supposed to before or closer to the Gold/Silver ratio reaching a significant low (in terms of time and the ratio value), like in the 70s. Which means that silver was very undervalued as compared to gold (and still is), at the start of the current bull market, so it has more room to go higher versus gold and fiat currency. The Gold/Silver ratio was around 30 at the start of the 70s bull market, which is much lower than the 66 of November 2001.

Below, is a “fractal analysis” comparison of the current and 70s bull market for silver (all charts are from barchart.com):

Silver Price Forecast : Silver 70s style rally?

Silver Price Forecast : Silver 70s style rally?

The top chart is silver from 1966 to the end of 1979, and the bottom is silver from 1999 to August 2015. I have highlighted key events on both charts to show how the structure of the two bull markets could be similar. The current structure is bigger in terms of time.

The Dow/Gold ratio peaked in January of 1966, before the start of the precious bull market. In a similar manner the Dow/Gold ratio peaked in August 1999, before the start of the current bull market.

Some time before the first important peak of the silver price in February 1974, the Dow again made a significant peak (in January 1973). This is very similar to the October 2007 peak of the Dow, which came before the April 2011 peak in silver.

Again, after the Dow peak of February 1974, there was another significant Dow peak in December 1976, some time before the peak of the silver bull market in January 1980. In May of this year, the Dow made a peak, which could be its ultimate peak for its long running bull market. If this is actually the peak, then it is similar to the Dow peak of December 1976, which came some time before the peak of the silver bull market.

So, if this fractal analysis is accurate, then we will see significantly higher silver prices over the next several years.

Another important difference of this bull market compared to the 70s bull market, is the fact that the current Dow peak before the ultimate silver top is actually much higher than all previous Dow peaks during the silver bull market. During the 70s, that similar Dow peak (December 1976) was actually lower than the January 1973 peak. I think this will prove to be significant, since the crashing Dow will act as fuel for the rise in silver prices.

For more of this unique fractal analysis on silver and gold, you are welcome to subscribe to my premium service. I have also recently completed a Long-term Silver Fractal Analysis Report.

Warm regards

Hubert

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

Silver Price Forecast 2015: Silver And The Petrodollar

Silver Price Forecast 2015: Silver And The Petrodollar

Many have mistakenly dismissed silver as just another commodity like oil, for example. If one looks at how silver has traded since 2001, in comparison with oil, one might agree with that mistaken believe. Below is a comparison of silver and oil since 2001 (charts from stockcharts.com):

Silver vs Petrodollat

Silver vs Oil

During the same periods, both goods traded higher or lower, together. For example, from 2001 to 2008, both silver and oil rose significantly. During those seven years, silver increased more than four times in value while oil rose more than seven times.

Based on the above chart-comparison, some might even argue that it is silver that is more overvalued than oil since it is trading at greater than triple its 2001 value, whereas oil is only trading at double its 2001 value.

Yes, they might have traded similarly since 2001, as well as during some other periods; however, they are at completely different points in their respective cycles. Oil is a true commodity, and it is ultimately subject to forces that rule over commodities, whereas silver is real money and likewise, subject to forces that rule over money.

We are currently at the end of an era of debt-based money, where the monetary importance of real money like silver has been supressed. Silver is about to move into that important role as true money, as more people will continue to search for a genuine store of value, due to the collapse of the current monetary order.

Oil is probably the most important commodity today, and is inescapably linked to the health of the world economy. It is also the key ingredient in the petrodollar system. Due to the huge debt burden, the world is in a massive deflationary period, which will get much worse over the next several years.

The oil price has already taken a huge hit, due to this slowdown in economic activity. However, it is not the end of this decline. Many events still have to occur before we see an end of this decline in oil the price – one of them being a complete crash of the Dow.

This decline in the oil price is a key component, that could lead to the end of the petrodollar system. The decline in the oil price will further put pressure on oil producing countries (part of the petrodollar system) to produce more oil to compensate for the lost revenue due to the lower price (see video by Mike Maloney), causing oil prices to drop further.

A long-term chart comparing oil and silver gives a more accurate view of their vastly different futures. Below is a long-term chart (from barcharts.com) comparing silver (green and red) and oil (green):

silver and petro dollar

silver vs oil long-term

Again, on the surface one would think that both move in a similar fashion. For example, they both rose significantly during the 70s, peaked in 1980, and then had a long decline towards 1999 to 2001, from where they moved in a similar manner until today (as explained above).

However, when you look at those highs around 1980, then you will notice that whereas oil has significantly exceeded its 1980 high (since then), silver only reached it briefly. Even now, oil is above or at its 1980 high. Silver, on the other hand, is at less than a third of the value of its 1980 high. So, which one is really overvalued?

This clearly points out that they are at two completely different points in their value cycle (just as the fundamental analysis above confirms). Silver will far exceed its 1980 high before this decade is over, while oil is very likely to go to extreme lows, before it is in another bull market. Believe it or not, from the look of that chart, I would say oil could eventually go lower than $10.

Using fractal analysis, I would say that oil is in a position similar to where silver was at the beginning of 1981- see point 1 on the silver chart, while silver is where oil was at the end of 2001 – see point 2 on the oil chart.

For more of this kind of analysis on silver and gold, you are welcome to subscribe to my premium service. I have also recently completed a Long-term Silver Fractal Analysis Report.

Warm regards
Hubert

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

Silver Price Forecast 2015: The Coming Silver Rally Will Outperform All Previous Ones

Silver Price Forecast 2015: The Coming Silver Rally Will Outperform All Previous Ones

by Hubert Moolman

17 August 2015

The Gold/Silver Ratio (GSR) is a key indicator in the analysis of the silver and gold markets. This ratio (or chart of the ratio) is probably one of the most difficult to analyse. One has to take a real close look at the ratio in order to find what actually drives the ratio up or down.

For example, from about after the end of the Second World War to the early 70s there was an economic boom with the Dow rallying significantly during those years. During the same period the GSR actually kept falling significantly until it actually bottomed in 1968.

From 1980, after the economic contraction of the 70s, we again had an economic boom with the Dow rising significantly until 1999. During this same period the GSR actually rose aggressively until its peak in 1991. Exactly, the complete opposite to what happened during the 40s to early 70s boom. So, the cycle for the GSR is definitely not fixed, relative to economic output or the Dow, for example; and this is one of the reasons why it can be difficult to analyse.

The Dow kept on rising after 1991 to 1999, while the GSR actually fell during the same period. This makes it even more confusing.

The basis for understanding the GSR and where it is going, lies in the understanding of how the debt-based monetary system and demonetization has affected gold and silver over the last 140 years. Below, is a chart I did some time ago for my long-term silver fractal analysis report, which goes a long way in explaining this:

Gold Silver Ratio vs Dow Ratio

long term gold silver ratio vs Dow gold ratio

The top chart is from minefund.com, and features the gold-silver ratio from 1791 to present. The bottom chart is from sharelynx.com, and features the Dow-gold ratio from 1800 to present. Here we will only focus on the top chart. I have drawn a vertical blue line, approximately where silver was demonetized (1870s). Notice how the GSR started rising, becoming very volatile with three massive peaks eventually forming. When the debt-based monetary system is taken out of the way, then the GSR will eventually stabilise at pre – 1870s levels and lower.

Silver Rallies and the Gold Silver Ratio

In the last 100 years, there were three significant silver rallies, depending on how you look at it, with the current one still in progress. Below is a long-term Gold/Silver Ratio chart showing those silver rallies:

Gold To Silver Ratio Historical Lon term Chart

Gold To Silver Ratio Historical Lon term Chart

I have highlighted the periods during which the silver rallies occurred from bottom (B) to peak (P). 

  • The silver rally of the 30s started (measured from bottom) before the 1940s major peak of the GSR.

  • The silver rally of the 70s started (measured from bottom) before the 1980 major bottom of the GSR.

  • The current silver rally started (measured from bottom) after the 1991 major peak the GSR.

Although the three rallies have similarities (which I dealt with in a previous silver fractal analysis article), they are actually radically different, when you look at them relative to the GSR.

The 30s rally started early, since the demonetization of silver; and there would have still been a lot of silver in the market – those that should have been otherwise used as coinage, but were being melted down and sold in the open market, as country after country demonetized silver. The silver rally was not that strong because silver had not bottomed yet, in relation to gold.

The rally of the 70s started at a time when the demonetization process was well on its way, with most countries having already discontinued using silver in circulation coins, for example. However, the conditions were still not right for silver to return permanently to pre – 1870s levels.

One of the biggest obstacle to this was the fact that debt-levels relative to GDP were actually very low as compared to that of the 20s and 30s. Therefore, the debt-based monetary system was still well supported and able to continue despite a big demand for silver and gold. However, silver was still able to rally significantly, with the GSR eventually just touching pre-1870 levels for a very short time.

The current silver rally started at a much different and more favourable time as compared to the 70s rally. The biggest difference was the fact that this rally actually started after or closer to the GSR reaching an all-time high level (in terms of time and the ratio value) as supposed to before or closer to the GSR reaching a significant low (in terms of time and the ratio value), like in the 70s. Which means that silver was very undervalued as compared to gold (and still is), at the start of the current rally, so it has more room to go higher versus gold and fiat currency.

Although, the 30s rally started closer to the GSR reaching an all-time high level (in terms of time and the ratio value) – like currently; it was on the wrong side of the major peak. So, conditions appear to be a lot better for the current rally – much like cycling down a hill is compared to cycling up a hill.

Another big difference is the fact that current debt levels are much higher than that of the 70s and even the 30s, nominally as well as relative to GDP. This significantly weakens the position and foundations of the debt-based monetary system. Again, this means conditions for the current silver rally is much better, for its opposition is really weak as compared to the 70s and 30s (note that silver is in direct opposition to our monetary system).

Lastly, the significant length of time since the demonetization of silver, and the events during that time, shaped the silver market in such a manner that it is now in peak condition (inelastic supply, low quantities investment grade silver, being a small market relative to money supply, etc.) to reach higher values. The double top in the GSR chart as well as the double bottom on the long-term silver chart suggests this.

This sets silver up to exceed its 1930s and 1970s performance, by far. The last thing that needs to be removed (which now are being removed), is the headwinds caused by a rallying stock market.

Do not expect silver to equal or only just better its 1970s performance. That would be akin to a man who bullied a lion cub a few years earlier, expecting to do the same again to that now fully-grown lion.

For more of this kind of analysis on silver and gold, you are welcome to subscribe to my premium service. I have also recently completed a Long-term Silver Fractal Analysis Report .

Warm regards

Hubert

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

Gold Price Forecast 2015: Owing More Than Half Of The World’s Gold

Gold Price Forecast 2015: Owing More Than Half Of The World’s Gold

Gold has bottomed in terms of just about everything like oil (in 2005), platinum (2008) and the Dow (1999). One important measure in terms of which it has not bottomed is the amount of currency (US adjusted monetary base).

This monetary base, as the name suggests, is at the root of debt or money creation in this debt-based monetary system. If this system was honest, then this monetary base would basically reflect gold available at the Treasury or Federal Reserve to redeem currency issued by the Federal Reserve.

Yes, the Federal Reserve does not promise to pay the bearer of US currency gold anymore; however, “paying gold” is the measure by which we will know how corrupt and leveraged the system is.

According to the Federal Reserve Bank the adjusted monetary base on 5 August 2015 was $4.019 trillion. With gold at $1 090 that is roughly 3.69 billion troy ounces or 114 771 tonnes of gold that is owed. In comparison, during March 2008 when gold peaked at $1 000 per ounce, it would have been 0.857 billion troy ounces of gold (26 656 tonnes) that was owed.

In their May 2015 report, The US Treasury claims to have 0.262 billion troy ounces or 8 149 tonnes of gold. That is a massive shortage of roughly 3.428 billion troy ounces or 106 622 tonnes of gold, if all the debt represented by the monetary base is settled in gold.

According to some estimates total world gold reserves could be roughly between 155 244 (4.991 billion oz) to 171 300 (5.51 billion oz) tonnes (estimates by James Turk and GFMS respectively). So, the US Treasury should have about 67% to 74% of all the world’s gold in order to settle most of its obligations.

Also, 22 000 tonnes is the most gold reserves the US has held at any point in time. Even this is nowhere close to 114 771 tonnes owed. It is scary to think that a debt of about half of all the estimated world gold reserves has been amassed in 7 years. (from owing 0.857 billion ounces in 2008 to owing 3.69 billion ounces in 2015).

It is clear that the system is way over-leveraged and obligations will never be settled. This over-leveraged system will at some point de-leverage as it has done before. To gain more insight regarding this let us look at the chart below:

Analysis US Monetary Base

Gold to US Monetary base ratio

chart generated at http://www.macrotrends.net

Above, is a chart that shows the ratio of the gold price to the St. Louis Adjusted Monetary Base back to 1918. That is the gold price in US dollars divided by the St. Louis Adjusted Monetary Base in billions of US dollars. So, for example, currently the ratio is at 0.27 [$1 090 (current gold price)/ $4 019 (which represents 4 019 billions of US dollars)].

On the chart, I have indicated the three yellow points where the Dow/Gold ratio peaked: point 1, 2 and 3. After the peak in the Dow/Gold ratio, the Gold/Monetary Base chart made a bottom at the red points 4 and 5 respectively. It is at these points that the monetary base could not expand relatively faster than the gold price increased.

Point 4 (about Oct 1932) on the chart, represents an approximate point where the contstraint or limitation due to the fixed gold price at $20 and ounce was being adversely felt by the US due to, the need to increase the money supply. As the ratio started to increase from this point due to people redeeming their gold (stopped to an extent by gold confiscation order); they were eventually forced to revalue gold to $35 an ounce in 1934. In reality, this actually represented a downward revaluation of the US dollar of 42.9%, which also indirectly increased the money supply.

Point 5 (about January 1971) on the chart, represents a time when the US was losing a significant amount of gold due to the nations demanding redemption of their US dollars for gold. Due to being unable to cover all the foreign holdings of US dollars with the related amount of gold, the US suspended (really ended) the convertibility of the US dollar into gold, on 13 August 1971. Not only was this a debt-default, but also a downward revaluation of the US dollar. This is because now those nations holding US dollars had to go to the open market to get gold. Instead of getting their gold at $35 and ounce, they had to pay $43.40 on 13 August 1971, and much higher prices as gold increased significantly over that decade. Now the US could increase the monetary base without any gold obligations to nations as a restriction.

From the above, it is clear that we had two similar patterns playing out in the early 30s and 70s. We had a major peak in the Dow/Gold ratio followed by a huge demand for gold, and an eventual revaluation of the US dollar.

The current situation, from 1999 to today, is shaping up in a very similar way. Point 3 (about August 1999) is when the Dow/Gold ratio made a significant peak. From that time to now, the chart has actually performed in a similar manner to the early 30s and 70s, except for the pattern being much bigger. Now, there is likely to be an incredibly huge demand for gold, which will go together with a great deflation. This is very similar to the redemption of US dollars for gold in the 30s and 70s scenarios above.

This demand for gold will eventually cause point 6 to be in, with the ratio reversing violently upwards. It is very likely that at some point the US will be forced to revalue the US dollar in order to counter the deflation. The gold price will go to incredible highs during this phase. Based on this chart and the current monetary base, it could go to at least 5 times the monetary base, which is gold at $20 000.

For more of this kind of analysis on silver and gold subscribe to my premium service.

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

Silver Price Forecast 2014: Silver’s Ultimate Rally When Paper Assets Collapse

Silver Price Forecast 2014: Silver’s Ultimate Rally When Paper Assets Collapse

The relationship between the Dow and silver has been very consistent during the last 100 years. After each of the major Dow peaks (real, not necessarily nominal peaks), we eventually had a major bottom in silver. Below, is a 100-year inflation-adjusted Dow chart:

Silver Price forecast using the Dow

Dow’s performance during silver rallies

In September 1929, the Dow peaked in terms of US dollars as well as in terms of gold ounces (real terms). After about 1 year and 4 months, silver made a significant bottom. While the Dow continued to fall for most of the time, silver rallied until it peaked in January of 1935. At silver’s peak, the Dow was about 30% lower in real terms than what it was at silver’s bottom.

Again, in January 1966, the Dow peaked in real terms. After about 5 years and 10 months, silver made a significant bottom. While the Dow continued to fall for most of the time, silver rallied until it peaked in January of 1980. At silver’s peak, the Dow was about 55% lower than it was at silver’s bottom.

In 1999, the Dow once more peaked in real terms, and about after 2 years and 3 months, silver again made a significant bottom. However, over the period from the silver bottom to the peak in April 2011, The Dow actually went sideways (actually slightly higher). See on the following chart:

Macrotrends.org_Dow_Jones_100_Year_Historical_Chart(3)

This is just one of the reasons why I know that the April 2011 high in silver is not the peak for this bull market. Why? Silver stands in direct opposition to paper assets like stocks that are part of the Dow. Therefore, when silver has a “real deal” rally, then paper assets like the Dow will lose significant value over the same time.

This is because the debt-based monetary system does what I call a “mirror-effect”, whereby, silver (and gold) is pushed down in value, to a similar extent as to which paper assets such as general stocks are pushed up in value. When the rally of the paper assets eventually runs out of steam, then there is a big push for silver and gold.

Silver’s real deal rally will happen when people run to silver for its monetary benefits. That is not really happening yet, in a big way, but it is about to – very soon. Money is what silver is, and it is this that will drive the coming spectacular silver rally.

So, if we look at the Dow chart again (below), one can see that the silver peaks of the 70s and 30s occurred when the Dow was trading closer to the lower levels of its range. Currently, the Dow is trading at all-time high levels. If the Dow is currently having a “real deal” rally, then it means we are going to have to wait a long time before silver has its real rally.

Macrotrends.org_Dow_Jones_100_Year_Historical_Chart edited 3

However, if the Dow is just having a fake rally, then silver will spike as soon as the Dow’s fall gathers steam, and possibly peaks when the Dow hits a level indicated on the chart, as a minimum. One, therefore, has to decide whether this Dow rally is real or fake.

For more of this kind of analysis on silver and gold, and why I think that the Dow’s current rally is fake, you are welcome to subscribe to my premium service. I have also recently completed a Long-term Silver Fractal Analysis Report.

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

Silver Price Forecast 2014: Monetary Collapse and Silver’s Not So Orderly Rise

Silver Price Forecast 2014: Monetary Collapse and Silver’s Not So Orderly Rise

We are about to see the end of our current international monetary system. Based on much of the evidence that I have written about previously, this appears to be a certainty. The systematic build-up of this current monetary order went together with the gradual phasing out of silver from the monetary order.

This system, by its very nature, has been diverting value away from silver. To understand this, just imagine that silver was actually used as currency (like the paper Dollar is currently used); we would then have much less silver available for sale in the current silver market. Based on the demand and supply economic model, this would then mean that the silver price would rise significantly.

The fact that silver is not held by central banks in significant quantities(or not held at all), puts it at a further disadvantage as compared with gold, in the current monetary regime. This is one of the reasons why silver is often mistakenly ignored as real money.

The rise of silver and the collapse of the monetary system is inescapably linked. Therefore, if the collapse of the monetary system is not orderly, then the rise of silver’s value will not likely be orderly. Collapse by definition suggests: to break or fall suddenly. This would suggest that when the time comes, silver will explode higher suddenly; for example, it could be possible that it rises $10, $20, $100 a day, until you can suddenly not buy it with fiat money. Interestingly, that actually means that silver and gold will reach the same price in fiat currency.

So, if you are buying physical silver to hedge against the collapse of the monetary system, you are not buying it, and looking for the price to rise to about $30 at the end of this year. No, you are expecting a sudden explosion of price, you just do not know exactly when. The approach of the silver “stackers” is therefore, the best approach, given that a monetary collapse is inevitable.

Due to the fractal nature of markets, I believe that what happened to silver during the 70’s was a prelude to this coming “end of the monetary system rally”. Silver went from $8.70 in August 1979 to $50 in January 1980. That was a phenomenal feat. Few goods (if any at all) have seen such a big increase in such a short time.

Here, I will be using the Gold/Silver ratio to illustrate how the 70s price movements for silver (and gold) is a miniature version of price movements from 1980 to 2014. Below, is a 100-year Gold/Silver ratio chart:

silver forecast with gold silver ratio

analysis of sold silver ratio chart

On the chart, I have marked two patterns with points 1 to 5. It appears to be a relevant comparison, since both patterns start from a major peak in silver, 1968 and 1980, respectively. Both patterns started at the bottom of the 100-year range of this ratio, in fact, at a major bottom (1968 & 1980).

The two patterns appear very similar – similar, but not identical. If the similarity continues, then the current pattern may complete at a point much lower than a ratio of 15. This could mean significantly higher silver prices just like it did in 1979/1980.

There are more indicators that support the likelihood of a sudden and massive spike in silver due to collapse of the monetary system.

For more of this kind of analysis on silver and gold, you are welcome to subscribe to my premium service. I have also recently completed a Long-term Silver Fractal Analysis Report.

Hubert

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

Silver Price Forecast 2014: Significant Silver Rallies Usually Follow Major Dow Peaks

Silver Price Forecast: Silver Price Analysis, Silver Price Out Look and Silver Price Prediction 2014

Significant nominal peaks in the price of silver tend to come after significant nominal peaks in the Dow. This has been the case for the last 90 years at least.

It is no coincidence that significant silver rallies follow after significant Dow rallies end. It is simply a natural reaction to what caused the stock market rally as well as the effects of that rally. So, if it happened before, it will certainly occur again.

These stock market rallies are driven by the expansion of the money supply, causing a big increase in value of paper assets (including stocks) relative to real assets. When the increase in credit or the money supply has run its course, and is unable to drive paper price higher; value then flees from paper assets to safe assets such as physical gold and silver, causing massive price increases.

Below is a 100-year inflation-adjusted silver and gold chart (generated at macrotrends.net):

Silver and Dow rallies

Silver and Dow long term comparison

On the chart, I have indicated where the Dow/Gold ratio peaked, in 1929, 1966 and 1999. Significant silver (and gold) rallies eventually followed after all of those peaks. The rally after the 1929 Dow peak, ran until 1934. It is important to know that the Dow also peaked when the Dow/Gold ratio peaked in 1929.

The silver rally after the 1966 Dow peak, ran until 1980. In this case, the Dow’s major peak (in 1973) only came 7 years after the Dow/Gold ratio peak. Note that a big rally actually came right after the major Dow peak of 1973.

After the 1999 Dow peak, we certainly had a silver rally, which started in 2001. To date, the Dow has made a major peak only 14 years after the Dow/Gold ratio peak of 1999. The peak I am referring to, is the one of December 2013. Already we can see that there is some kind of progression as to how long Dow peaks occur after the Dow/Gold ratio peaked – first at the same time, then 7 years after and now already 14 years after.

Based on the past price action, we could have a massive silver rally when the Dow has peaked, just like it did in 1973. The question as to whether the Dow actually peaked in December 2013; therefore, becomes very important. The current similarity of the Dow and gold is a topic I am continuously dealing with in my premium service, and appears to agree with the above scenario.

If the Dow has not yet peaked, it does not mean that we will not have a silver rally. All it means is that we will have to wait a little longer. So, as I have said many times before, it is the Dow that holds the key to the future of gold and silver, at his moment.

For more on this topic, and similar analysis you are welcome to subscribe to my premium service. I have also recently completed a Long-term Silver Fractal Analysis Report .

Hubert

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

Jason Hommel Silver, Jim Sinclair Silver, Mike Maloney Silver , King News Silver, David Morgan Silver  silver price

Silver Price Forecast 2014: Silver Prices Rise Dramatically At The End – Are We Close To The End?

Silver Price Forecast: Silver Prices Rise Dramatically At The End – Are We Close To The End?

Silver or the silver price is generally much more difficult to analyze than gold. Part of the reason is that so much less is known about the specifics of the silver market. Silver analysis is often done “through” the analysis of gold. This is not completely wrong, since silver and gold mostly moves in a similar manner – they have the same monetary properties after all.

However, it must be understood that despite their similar properties, they have different monetary histories (the last 400 years at least).  These different histories have had the effect of causing silver to be scarce in a monetary form (silver suitable for pure investment demand like bullion), for example. The fact that few central banks hold silver, compared to gold, is another example of an effect that the different monetary histories had on these markets.

These and other differences affect relative price movements of gold and silver (especially with regard to timing and extent of price movement), and can often be seen on the charts. One example of such a difference that can be seen on the charts, are the fact that gold often bottoms before silver does. The current bull market started after gold bottomed in 1999, whereas silver only bottomed in 2001, for example.

These differences (divergence) can often be seen in all time frames (short-term to very long-term). However, the tendency for most people is to be aware of the short-term and maybe the medium term, but completely be ignorant of the long-term.

This kind of divergence, as you will see (later), is the reason why many look at silver and gold’s relative performance, and then make the conclusion that silver is not money, when the fact is that due to the significant distinct long-term timing; silver is at a different place than gold, on its way to be valued fairly.

I would like to illustrate that this divergence highlights why silver is such incredibly good value at the moment, and why the coming silver price rally will likely dwarf everything else. This is an aspect I have written about already.

Below, are very long-term charts of silver (top) and gold (bottom):

Long term gold vs silver

Silver Price Forecast – Silver and Gold different timing

The blue is the real price, and the red is the nominal price of silver and gold. For this analysis, we will focus on the real price. On the gold chart, the real price of gold bottomed in 1920 and in 1970, which could be described as a 50-year double-bottom. In 1935 (point 1), for the first time since the first bottom, did gold make an attempt to test the previous highs in place during the majority of the 1800s.

On the silver chart, the real price of silver bottomed in 1931 and again in 2001, which could be described as a 70-year double- bottom. That is 20 years longer than gold’s bottom, quite a massive divergence. In 1980 (point a), for the first time since the first bottom, did silver make an attempt to test the previous highs in place since the 1800s, and actually exceeded it for a while, which is typical of how silver can spike. So, silver actually technically did what gold did at least 40 years earlier – again, a massive divergence.

After the second bottom of gold in 1970, gold started a rally that ended much higher (at point 2 in 1980) than the previous highs of the 1800s. That is what rallies after valid double-bottoms normally do. Now, as I have said above, silver made the second bottom of its double bottom in 2001, and has started a rally since then. If it continues to follow what gold did, as well as what normally happens after a valid double bottom, then this rally will end much higher than the real highs of the 1800s.

Given the fact that silver has a tendency to spike much more than gold does, and what I call: “silver’s short body long tail effect”; then we should expect massively high silver prices during this coming rally. When you compare the silver chart to the gold chart, you will see how silver often rises slowly for the majority of a significant rally (short body) but will rise significantly fast at the very tail-end of the rally (long tail).

So, this is telling me that silver is actually technically where gold was in the 80s. Furthermore, the fact that silver only bottomed in 2001, whereas gold bottomed in 1970 (30 years earlier), would in some way explain why silver’s behaviour would mostly cause people to believe that it is not money – at least not like how they consider gold to be money.

For more of this kind of analysis on silver and gold, you are welcome to subscribe to my premium service. I have also recently completed a Long-term Silver Fractal Analysis Report .

Hubert

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

Jason Hommel Silver, Jim Sinclair Silver, Mike Maloney Silver , King News Silver, David Morgan Silver silver prices

Silver Price Forecast: Massive Debt Levels Will Push Silver To $150 And Beyond

Silver Price Forecast:

The massive debt bubble created by our monetary system is about to burst. The demonetization of gold and silver, has over the years diverted value from these metals, to all paper assets (such as bonds) linked to the debt-based monetary system.

The process of the devaluation of gold and silver, started by the demonetization of gold and silver, is about to reverse at a greater speed than ever before. This is similar to what happened during the late 70s, when the gold and silver price increased significantly. However, what happened in the 70’s was just a prelude to this coming rally. The 70’s was the end of a cycle, this is likely the end of a major cycle; an end of an era of the debt-based monetary system (dishonest money).

This era of dishonest money, has filled the economic world with many promises that will never be fulfilled. There will be a massive flight out of paper promises, into the ideal safe haven assets that would offer protection. In my opinion, silver will be the leading asset when this flight out of paper promises happens. This fraud started with the demonetization of silver and it will end with silver taking its place as money – the most marketable commodity.

If silver only equals the performance of the 70s, it will reach $150. However, this cycle will only be over when silver and gold are not quoted in the current fiat currencies or any other fiat currency. Instead, most goods would be quoted in terms of silver and gold.

Below, is a self-explanatory comparison of the current silver bull market and the 70s bull market:

Silver Bull Market Comparison

Silver Bull Market Comparison

For more of this kind of analysis on silver and gold, you are welcome to subscribe to my premium service. I have also recently completed a Long-term Silver Fractal Analysis Report .

Hubert

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

 

Silver Price Forecast: Gold/Silver Ratio Signals Much Higher Silver Prices

Silver price Forecast 2013:

It is natural to compare the current precious metals’ bull market with that of the 70s, since there are many similarities between the two. Below is a comparison which illustrates some of the similarities between the two bull markets:

current bull market vs 70s bull market edited

all charts are generated at macrotrends.net

The top chart is gold (inflation-adjusted) from 1966 to1981, and the bottom is gold (inflation adjusted) from 1999 to 2013.  It is evident that both gold bull markets, started sometime after a major peak in the Dow/Gold ratio. They both had an important peak about nine years after the Dow/Gold ratio peak, which was followed by a significant correction.

After the peak and correction, the price eventually went higher to a far greater peak, which in the case of the 70s chart was the end of the bull market. Knowingly, or unknowingly, these similarities are probably the reasons why many think that the gold and silver bull markets ended in 2011, with the peaks in that year.

Does it mean that the bull market is indeed over, since gold and silver did not rally higher than the 2011 peaks, in 2012 and up to now in 2013? Especially since the above charts seem to suggest so.

The Gold/Silver ratio appears to provide some answers to this question. Below, is a 100-year Gold/Silver ratio chart:

Long-term Gold/Silver Ratio

Long-term Gold/Silver Ratio

On the chart, I have indicated the period of the 70s and latest bull market, between red and green lines. Notice how similar the patterns (marked a to e) are during these two periods, again illustrating how reasonable it is to compare the two bull markets. However, this chart also shows why those who believe that the bull market is over are probably very wrong.

Although, the patterns are similar, they do not exist in a similar context in relation to the long-term movements of the Gold/Silver ratio chart. The 70s pattern formed more towards the bottom of the 100-year range of this ratio, whereas the recent pattern formed more towards the top.

More importantly, the 70s pattern formed at or just after a major bottom (1968) in the ratio, whereas the recent pattern formed just after a major top. This means the 70s pattern was formed during an uptrend in the ratio, and it was, therefore, more likely that the ratio would continue higher over the years following the pattern. The recent pattern is formed during a downtrend in the ratio and; therefore, there are likely greater forces at work putting downward pressure on the ratio.

This compares favourably to the positive fundamentals of the silver (and gold) market, since there is nothing to suggest that paper (money) is now safe, and much less riskier than gold and silver. The massive debts that lurk behind the fiat currencies (including the US dollar) are representative of these great forces that will keep more people preferring gold over these debt-ridden currencies.

Point e of the 70’s pattern is where gold and silver made significant all-time nominal highs, much higher than any previous highs. On the recent pattern only gold made an all-time nominal high, higher (but not much higher) than any previous highs. Silver only equalled its 1980 all-time nominal high. This is a major non-confirmation which signals that although the two patterns played out in a similar manner, it does not mean that point e in the recent one is the end of the gold and silver bull market just like in 1980.

However, why did we not get the final blow-off rally for silver, to a price much higher than any precious nominal high? Again, it can be best explained by looking at the Gold Silver ratio. Below, is the same 100-year Gold/Silver ratio chart:

100 year Gold Silver Ratio Chart

100 year Gold Silver Ratio Chart

However, here I show a more relevant comparison to the 70s bull market (pattern). On the chart, I have marked the 70s bull market with points 1 to 5. Instead of comparing it to the latest bull market, starting in 1999, I compare it to the period starting in 1980, when silver peaked in January of that year to now (which I have market 1 to 4, with point 5 still to come). If point 5 occurs lower than 15 (as illustrated), we will have a very accurate fractal (pattern), similar to the one of the 70s (but bigger).

This is a more relevant comparison since both patterns starts from a major peak in silver, 1968 and 1980, respectively. Both patterns started at the bottom of the 100-year range of this ratio, in fact, at a major bottom (1968 & 1980).

The current pattern has not completed yet, and it would suggest that it will only complete at a point much lower than a ratio of 15. Such a completion of the pattern is consistent with the bullish fundamentals of silver (and gold) in relation to paper money – understanding that a lower ratio will likely mean higher gold and silver prices.. Furthermore, it is consistent with the scenario that we are in a downtrend in the ratio; therefore, being, more likely to go lower over the next couple of years. A recent comparison of the relationship between the silver and Dow bull markets tell the same story.

For more of this kind of analysis on silver and gold, you are welcome to subscribe to my premium service. I have also recently completed a Long-term Silver Fractal Analysis Report .

Hubert

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

Silver Price Forecast: Using Gold to Forecast Silver’s Final Blow-Off Rally

Silver price Forecast: Using Gold to Forecast Silver’s Final Blow-Off Rally

I have previously written about how gold can be used as a leading indicator for silver. Using this principle, there is an indication that we are at or close to the period for a 1979/1980 style rally in silver. The following is a simple concept but can make for some intense reading (a lot of concentration and possibly re-reading is required). Below is gold chart from 1968 to 1975:

Gold Price Forecast - 70s gold cup

Gold Price Forecast – 70s gold cup

I have highlighted a cup formation that formed from 1969 to the end of 1971. It took about 33 months to form the cup. If one counts 33 months (the time the cup took to form) after price went higher than the peak of the cup, then one gets to the point where the final rally to the peak started.

Also, the peak came in 36 months after passing the peak of the cup.

The silver chart also formed a cup around the same time of the gold chart; however, silver’s cup was bigger. Below, is a silver chart from 1968 to 1980:

Silver Price 2013

Silver Price Forecast – Silver Cup Formation

On the chart, I have highlighted the cup that formed during the same time as the gold cup. The cup formed from 1968 to the beginning of 1973 – about 60 months. Now, suppose that it was 1978 and more than 60 months have passed since the silver price went higher than the cup’s high. If one was now (1978) to use the outcome of the gold price action after its cup formation to predict what silver could do after its cup formation, one would come to the following conclusion:

  1. 33 months (the time the cup took to form) after the gold price went higher than the peak of the cup, then one got to the point where the final rally to the peak started. Applied to silver, it means that its final rally to the peak could come soon (from that time in 1978) – and as we can see it did.
  2. 2.       The final peak in gold came sometime after the 33 months after the price went higher than the cup’s high.  It came 36 months after the price went higher than the cup’s high – that is 36/33 = 1.09 times the cup’s width. Applied to silver, it means the silver peak can come sometime after the 60 months after the price went higher than the cup’s high. It could come as early as 65.46 months after the price went higher than the cup’s high. The peak did come sometime after the 60 months after the price went higher than the cup’s high, however it was 80 months and not 65.46.
  3. 3.       The peak for gold was 17.03 times the depth of the cup, higher than the peak of the cup. The calculation is as follows: depth of the cup = 43.9 (peak of the cup) less 35 (bottom of the cup) = 8.9. Price movement from peak of the cup to ultimate peak = 195.5 (ultimate peak) less 43.9 (peak of the cup) = 151.6. That gives us 17.03 (151.6/8.9).

The silver peak could be a minimum of 17.03 times that of the depth of the silver cup plus the high of the silver cup. That would be 1.277 (2.565 (high of silver cup) less 1.288 (bottom of the silver cup) times 17.03 plus 2.565 = 24.31. The peak was not at $24.31 but at $50 – 37.145 times the depth of the cup plus the peak of the cup.

 

Using this methodology and putting it all together, it would have been reasonable to expect:

  • The final rally to silver’s peak to start after May 1978.
  • The final peak to come as early as 5.46 months after the end of May 1978 – therefore, November 1978. But this would be subject to price hitting a new all-time high or at least or close to the price predicted in point 3 above.
  • The peak to at least hit $24.31 – before or after November 1978.

The price did hit a peak in November 1978, but it was not an all-time high or anything close to the peak estimated in point 3 above. A strict application of this methodology would have meant one would have held on to December 1979 when the price went to the target of $24.31. That would have been a good return from the $5 to $5.5 price levels of 1978.

Now, that is easier done in hindsight, since the reality is a very different story. Despite missing out on silver doubling (at least) from $24, I would be happy with such an outcome. Roughly that would be like silver going to $400 from where it is now, but one only catching the move to $200. I would take that anytime it was offered, now.

From the above, you can see that it is possible to use gold’s price action to predict what the silver price could do and when. Let us now apply the above methodology to the current silver and gold situation. Below is a monthly gold chart from 2008 to 2013:

Gold price Forecast: 2008 to 2013

Gold price Forecast: 2008 to 2013

Just like for the 1970s, I have highlighted a formation (this time more of a triangle instead of a cup) that formed from the beginning of 2008 to the end of 2009. It took about 20 months to form the triangle. If one counts 20 months (the time the triangle took to form) after price went higher than the peak of the triangle, then one gets to the point where the final rally to the peak started (end of June/beginning of July 2011) – just like it was for the 70s chart.

Also, the peak came in around 22 months after price went higher than the triangle. That is relatively the same as the peak for the 70s chart. The peak for the 70s gold chart came in about 36 months after passing the peak of the cup; however, the formation is currently smaller than the 70s formation – a ratio of 20:33. So if applied to the 36 months of the 70s, we would get 21.82 (20/33 *36), which is rather close.

The silver chart also formed a triangle around the same time of the gold chart; however, silver’s triangle was bigger. Below, is a silver chart from 2006 to 2013:

Silver Price Forecast 2006 to 2013

Silver Price Forecast 2006 to 2013

On the chart, I have highlighted the triangle that formed during the same time as the silver cup. The triangle formed from 2008 to before the end of 2010 – about 31 months. Using the same methodology as we did for the 70s situation we can try to predict what the silver price might do. Unfortunately, this methodology cannot help us to determine where the bottom for this silver decline might be (but more about that later).

  1. For gold, as said above, If one counts 20 months (the time the triangle took to form) after price went higher than the peak of the triangle, then one gets to the point where the final rally to the peak started (end of June/beginning of July 2011) – just like it was for the 70s chart. So if applied to silver, it means that its final rally to the peak could come soon, since we have passed more than 31 months since the price first went higher than the top of the triangle.
  1. The final peak in gold came sometime after the 20 months after the price went higher than the triangle’s high.  It came 22 months after the price went higher than the triangle’s high – that is 22/20 = 1.1 times the triangle’s width. Applied to silver, it means the silver peak can come sometime after the 31 months after the price went higher than the triangle’s high. It could come as early as 34.1 (1.1*31) months after the price went higher than the triangle’s high. Remember this month is 33 months after passing the triangle’s peak. However, this time, based on the 70s experience, we expect the silver peak to come much later than the relative gold peak. If we apply the 70s ratio then the silver peak can come 41.33 (80/60*31) after passing the peak of the triangle.
  1. The peak for gold was 2.52 times the depth of the cup, higher than the peak of the cup. That is 888 (1921 less 1033) divided by 353 (1033 less 680). The silver peak could, therefore, be a minimum 2.52 times that of the depth of the silver cup plus the high of the silver cup. That is $53.8578 (2.52*12.89+21.375). However, this time, based on the 70s experience we can expect the silver peak to be more, relative to the gold peak. If we apply the ratio of the 70s, then the silver peak can be 5.50 (37.145/17.03* 2.52) the depth of the silver cup plus the high of the silver cup. That would be $92.27 (5.5*12.89 + 21.375)

Using this methodology and putting it all together, it would be reasonable to expect:

  • The final rally to silver’s peak to start any time now.
  • The final peak to come as early as 34.1 months after price passing the triangle’s peak – therefore, August 2013. But this would be subject to price hitting a new all-time high or at least or close to the price predicted in point 3 above. However, the 70s experience tell us that the peak might only come in much later – 41.33 months after passing the peak of the triangle. That would be February 2014.
  • The peak is to at least hit $53.8578, but based on the 70s experience it could hit at least $92.27

The reason I am presenting the above is not for the purpose of calculating a target for silver, but to have an idea of where silver is going over the next months as well as have a feel for the timing involved. The price targets are just a guide to help navigate the timing calculations. I will go into more detail about price targets in another silver and gold update.

Note that the above is an extract from my premium silver update.

For more of this kind of analysis on silver and gold, you are welcome to subscribe to my premium service.     I have also recently completed a Long-term Silver Fractal Analysis Report .

Hubert

https://hubertmoolman.wordpress.com/

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

Silver and Gold Price Forecast: Gold and Silver Update

Silver and Gold Price Forecast 2013

Gold and Silver Rally Relative to the Dow

Since the last update, the Dow has had a rally which exceeded the previous all-time high. The rally appears to be nothing significant, since it was likely just a retest of the previous breakdown – See the Dow -chart below (from freestockcharts.com):

Dow for silver price forecast

Dow for silver price forecast

As previously stated, I believe the Dow to be the main obstacle to Gold and Silver’s major rallies. So, just as I expect the Dow to drop violently, I expect a violent rise in gold and silver at roughly the same time. This is because it is likely the same panic that causes the Dow fall that will make value to run towards gold and silver.

Also, let us not forget the bigger fractal pattern on the Dow chart (70s vs current) – charts from yahoo finance:

Dow for Silver and Gold Forecast

Dow 70s Fractal

Dow Chart for Gold Forecast

Dow current fractal

The top chart is the Dow from 1968 to 1974, and the bottom one is the Dow from 2008 to 14 June 2013. I have illustrated how these patterns are alike by marking similar points from 1 to 6. The Dow is now really stretching the possible timing for the collapse to an extreme.

In my opinion, the only thing possibly keeping the Dow from crashing now (if it is not busy crashing now), is the fact that we are not in October (its favourite peak month), yet.

Note that we are still in the period of risk aversion, as explained in my previous update, which creates the ideal conditions for the Dow to fall while gold and silver eventually rises. Gold rallies during periods of risk aversion are often the most aggressive ones. An example of a gold rally that occurred during a period of significant risk aversion was the one from July 2011 to early September 2011.

During that two-month period gold rose from $1480 to $1920 (a good 30%), while the Dow fell about 13% at the same time.

Silver and the Gold/Silver Ratio

Silver’s recent performance could be the best evidence that the current gold and silver rally could be “the real thing”. This is because silver has significantly outperformed gold since the beginning of August. We can see that from the gold/silver ratio, below – chart from stockcharts.com:

Gold Silver Ratio

Gold Silver Ratio

So, I continue to believe that continuing to exchange gold for more silver at these levels, is a move that one is extremely likely to be well rewarded for. It would make no sense to buy gold over silver, given that one expects that silver will outperform gold by a factor of at least two. That is that I expect the Gold/Silver ratio to fall to be at least lower than 30.The silver chart is also sending many positive signals. Below, is a monthly silver chart (from fxstreets.com):

Silver Price forecast 2013

Silver price forecast

The current bottom occurred during month 33 since the breakout of the top of the 2008 – 2010 triangle. Bottoms often occur on day 33 or month 33 from a bottom or a breakout. This makes it very likely that the bottom in June 2013 was the final bottom, especially since it occurred almost exactly at the breakout from the 2008 – 2010 triangle (around the $18.50 area).

If you refer to my previous premium update – section: Using gold to forecast silver (From a timing point of view) – you will find on page 8 that I concluded that silver’s final rally to its peak could start at any time (then – 25 June 2013). Also, from that same comparison, it appears that silver is fast running out of time with the current pattern as compared to the 70s pattern (but, more details on this with a next premium update).

For more of this kind of analysis on silver and gold, you are welcome to subscribe to my premium service .   I have also recently completed a Long-term Silver Fractal Analysis Report .

Hubert

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

Silver Price Forecast: The Dow and Gold Silver Ratio Signals Coming Silver Rally

Silver Price Forecast 2013:

The Dow and Gold Silver Ratio Signals Coming Silver Rally

The Dow, in particular, has been the biggest obstacle to a rise in precious metals, due to it sucking up most of the available value on global markets. However, it appears that this obstacle is now out of the way, with the Dow likely having peaked.

Below, is update of the fractal comparisons between the current period and the 70s, I have done for the Dow in a previous article:

Dow 70s chart

Dow current pattern

(charts from yahoo)

The top chart is the Dow from 1968 to 1974, and the bottom one is the Dow from 2008 to 14 June 2013. I have illustrated how these patterns are alike by marking similar points from 1 to 6. It appears that there is a very good chance that we have finally reached the peak for the Dow.

This is a good picture of the medium-term situation that the Dow finds itself – right before a major decline just like in 1973. In 1973, soon after the Dow peaked, gold and silver started a massive rally; therefore, it appears that then, the Dow was also an obstacle preventing a silver and gold rally. This is, therefore, an indicator that we could be close to a major spike in gold and silver, as explained in a previous article.

Gold/Silver Ratio

The gold silver ratio is also, showing strong signs that silver and gold is about to spike significantly. Below, is a gold/silver ratio chart from stockcharts.com:

gold silver ratio chart

The ratio is currently retesting the area from which it broke down when it started the spectacular rally in 2010. If this area between 67 and 70 holds, then the ratio is likely to fall significantly. Note that this ratio falls significantly mostly when silver and gold is having a rally (with silver outpacing gold of course).

Silver Chart

Below, is a silver chart from 2006 to 2013 (generated at fxstreet.com)

silver at breakout point

Silver is currently retesting its important breakout area of 2010 (similar to the gold/silver ratio). That breakout area of 2010 appears to be a critical area. If this area holds (which is very likely), then silver is likely to start a massive multi-month rally. Additional analysis is contained in my premium service.

Remember that these are massive patterns, so much patience is needed.

Conclusion

It is very unlikely that both the Dow and gold & silver are going to make new significant all-time highs from here. We, therefore, have to decide whether it is equities that will continue a bull market from here, or gold & silver.

For more of this kind of analysis on silver and gold, you are welcome to subscribe to my premium service .     I have also recently completed a Long-term Silver Fractal Analysis Report .

Hubert

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

Silver Price Forecast: Silver and the Dow

Silver Price Forecast: Silver and the Dow

 

The Dow making new highs is likely to be very good news for silver investors, because nominal silver peaks tend to come after significant nominal peaks in the Dow. These stock market rallies are driven by the expansion of the money supply, causing a big increase in value of paper assets (including stocks) relative to real assets.

When the increase in credit or the money supply has run its course, and is unable to drive paper price higher; value then flees from paper assets to safe assets such as physical gold and silver, causing massive price increases.

The two most significant nominal peaks of the Dow were in 1929 and 1973. Silver made a significant peak in 1935, about six years after the Dow’s major peak in 1929. Again, in 1980, silver made a significant peak, about seven years after the Dow’s major peak in 1973. So, if the Dow is currently forming a major peak (like I think it is), we could possibly expect a major peak in silver, towards the end of this decade to early next decade. This means we are likely to have rising silver prices for many years to come.

In 1929, when the Dow was making its peak, silver was still in a downtrend which only bottomed in 1931. However, in 1973, silver was already in an uptrend by the time the Dow peaked:

 

Dow vs Silver 70s

Dow vs Silver 70s

The top chart is the Dow from 1966 to 1974, and the bottom one is silver during the same period. Silver was already in an uptrend when the Dow peaked. The Dow made a major nominal peak near the beginning of 1973, with silver peaking about a year after that. Furthermore, silver made a major peak in 1980, about seven years after the Dow’s 1973 peak.

Notice that silver was still trapped within a cup formation (lower than the cup’s high), out of which it only broke out after the Dow peaked.

Below is a current comparison between the Dow (top chart) and silver (bottom chart):

 

Dow vs Silver current bull market

Dow vs Silver current bull market

Like in 1973, silver is already in an uptrend long before the Dow’s possible major peak. The uptrend will still be intact, even if price falls further. If the Dow does peak very soon, will we have a silver top close to a year after the Dow’s peak? Also, will we have a major peak in silver coming some years after, like the 1980 peak?

Silver is again trapped within in a cup formation, lower than the cup high. This time the cup is much broader.  Again, can we expect a breakout from the cup’s high sometime soon after the Dow tops – like it did in 1973?

I believe that given the two questions above, the near future of the Dow will be telling for future silver prices.

The Dow’s relationship with the Dow/Gold ratio is highlighting something interesting regarding this current silver bull market compared to the previous two. Below is a 100-year chart of the Dow/Gold ratio:

 

dow gold ratio with Dow nominal peaks

dow gold ratio with Dow nominal peaks

 

In 1929, the Dow peak came at the same time as the Dow/Gold ratio peak; therefore, the nominal peak and the real peak coincided. The 1973 nominal Dow peak came 7 years after the Dow/Gold ratio peak. We are currently almost 14 years past the Dow/Gold ratio peak, and we still have not had a nominal peak in the Dow.

What is this progression in the timing of the Dow’s nominal peak relative to the Dow/Gold ratio telling us? Is this a natural progression or is it proving how increasingly bigger efforts are applied to artificially prop up the stock markets?

Whatever the reason, it has created a setup for a massive financial panic. Value is likely to run from paper assets to silver and gold like never before. While the first part of this collapse of paper assets has been relatively controlled; the last phase is far more likely to result in chaos. This means that the Dow’s collapse could be vicious.

At the same time, after having had a relatively subdued rise since the beginning of this bull market, silver could explode higher like never before, once the bottom is in. The current decline is likely to bring attractive opportunities to increase physical silver positions.

For more of this kind of analysis on silver and gold, you are welcome to subscribe to my premium service. I have also recently completed a Long-term Silver Fractal Analysis Report .

Hubert – hubertmoolman.wordpress.com

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

Silver Price Forecast: Silver Bull Market Is Following The Structure Of The 70s Bull Market

Silver Price Forecast:

The 70s silver bull took place during a period from a major peak in the Dow/Gold ratio (1966) to a major bottom in Dow/Gold ratio (1980). The silver bull market started in 1971 and ended at the beginning of 1980.

The current silver bull market also started after a major peak in the Dow/Gold ratio (peak was at the end of 1999).The current silver bull market started in 2001, and it is also likely to end when the Dow/Gold ratio makes a major bottom. See the chart below, as illustration:

 

Dow Gold Ratio long term chart showing Silver bull market

Dow Gold Ratio long term chart showing Silver bull market

In 2011, silver peaked at the $50 level, while in the same year, the Dow/Gold ratio made a bottom just lower than the 5.75 level. Was that the end of the silver bull market? Will the Dow go on to make highs that are multiples higher than the current high, while the silver price collapses?

The major problem with saying that the silver bull market is over, is the fact that the price has not even surpassed the high of the previous bull market. One can only begin to consider the possibility that the silver bull market is over when the price has gone a few multiples higher than the 1980 price of $50.

Until then, we look for a bottom in the silver price, and the next wave higher in this bull market. Instead, consider the Dow as a peaking bull market, with it being multiples higher than its 1973 high (the high of the previous major bull market).

Comparison of the current and 70s silver bull market

On the graphic below, the top chart is the silver bull market of the 70s, compared to the current bull market of the 70s (the bottom chart).

 

Current Silver Bull market vs 70s Silver Bull market

Current Silver Bull market vs 70s Silver Bull market

I have tried to line the two charts up; starting from both peaks in the Dow/Gold ratio (it is not exact, but close enough). The two bull markets are definitely following a similar pattern to some degree.

Notice that the first major peak in the 70s bull market came about eight years after the peak in the Dow/Gold ratio. The 2008 peak in the silver price was also about eight years since the peak in the Dow/Gold ratio.

During the 70s, the peak after eight years appears to have been a significant level, since price really accelerated higher, after clearing that peak. Price also accelerated higher when it cleared the 2008 peak, in 2010. The difference this time is the fact that currently we are having a retest of that peak level (which is not necessarily a bad thing).

If price does not go too far below the 2008 peak level ($21), then we have a very bullish looking pattern. The current retest of the 2008 peak level could mean that if we eventually find that bottom, and go higher, we are unlikely to ever see these levels again.

The comparison seems to suggest that the rally we had from August 2010 to April 2011, is just a prelude to the coming major rally. If the current bull market pattern continues to follow the 70s pattern, then we could have a peak in the price of silver when the Dow/Gold ratio bottoms.

We cannot be sure when this will happen, but should it be about 14 years after the peak in the Dow/Gold ratio, like it was during the previous bull market, then we could have a peak in silver at the end of 2013 to the beginning of 2014.

If the current bull market structure continues to follow the basic structure of the 70s bull market, then price should, at least, clear $140.

For more of this kind of analysis on silver and gold, you are welcome to subscribe to my premium service. I have also recently completed a Long-term Silver Fractal Analysis Report .

Hubert

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

Silver Price Forecast 2013: Silver’s Bullish Cup Formation

Silver Price Forecast 2013

The most significant fact about silver, from a charting point of view, is the mega cup pattern formed over a period of more than 30 years.

These cup (or cup and handle) patterns are very bullish formations. Below is a long-term silver chart showing the mega cup formation as well as two smaller cup formations:

silver price forecast

silver price forecast

When a cup is formed, it is often an indication that the price will eventually go higher than the peaks of the cup. This is why the mega cup formation is so significant, because it is telling us that the price of silver will eventually go higher than the $50.

For all the cups shown on the silver chart, gold had a similar cup. The main difference between the gold cups and silver cups is the timing. See a similar chart for gold:

gold price forecast

gold price forecast

In all three cases, the gold price went higher than the top of its cup before silver did. This means that gold was a leading indicator for the price of silver. In the case of the mega cup, silver has still not gone higher. Based on the fact that silver has always followed gold’s path by eventually going higher than the cup’s high, in the past, it is very likely that silver will do it again by going higher than the $50.

This is a very simple principle, but provides an enormous opportunity to those who are willing to buy physical silver and have the patience to hold on to it no matter how volatile the price swings.

The fact that we have such a big cup is what makes timing the breakout of the cup so difficult. I believe we have come close to the point where the silver price is about to challenge the cup’s high, and eventually breakthrough (more detail coming to premium subscribers only). First though, it has to make the low for the current decline.

On the charts above you can see that during the 70s, silver always went higher than its cup in the year following gold’s similar feat. It has already been more than three years since gold went higher than its cup high. Silver has still not gone higher; however this is reasonable considering the fact that the cup is so much bigger than the 70s cups.

Previously, I have written about how conditions are similar to that of 1973, when the Dow started a crash at the same time that gold started a spectacular rally. That was incidentally the year that silver also started a massive rally, and went higher than the cup formed before that.

Below is a silver chart showing price action around a cup of the early 70s:

gold after 73 cup edited

silver price forecast

silver price forecast

I have indicated a cup that was formed during the late to early 70s. Note that the gold chart also made a similar cup during that time. Early 1973, about the time when the Dow started its crash, silver was still trapped lower than the cup’s high. However, by 1973, the gold price had already gone higher than the cup’s high. In the same year silver went higher than the indicated cup’s high, eventually peaking multiples higher than the cup.

This is similar to today’s situation, with gold having already gone higher than the $850 area, and silver still lagging lower than the $50 area. This would suggest that the peak in the stock market (which I believe is busy happening now) will be the significant signal for the coming silver rally towards and beyond the $50 level.

For more of this kind of analysis on silver and gold, you are welcome to subscribe to my premium service. I have also recently completed a Long-term Silver Fractal Analysis Report .

Hubert

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

Gold & Silver Forecast 2013: On the Verge of a New Monetary Order and Gold’s Rise

Gold Forecast 2013: On the Verge of a New Monetary Order and Gold’s Rise Silver Forecast 2013

The last three major bull markets of the Dow were followed by some type of economic crisis and a major bull market in gold. This is no coincidence, since these massive bull markets have been mostly driven by the huge expansion of the money supply. When this expansion of credit is exhausted, which always happens, the confidence in all things (like stocks) inflated by this expansion of credit fails, causing a massive economic crisis and a rush to gold.We are still in the midst of last one’s crisis.

It is the Dow’s last two bull markets that are of interest due to the significance, of how they relate to the current monetary system. In 1944 a new global monetary order was established with the Bretton Woods agreement. The world had just come out of the Great Depression, and was completing the Second World War.

The creation of the new global monetary order as well as the new world order that came as a result of the war was indeed a fresh start. The Bretton Woods system brought about an international basis for exchanging one currency for another. It also led to the creation of the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (World Bank).

The member states tied their currency to the U.S. Dollar which was in turn pegged to gold at a rate of $35 per ounce. The U.S. Dollar became the world’s reserve and premier currency. The Dow had just started a bull market, and it was with this new created order that it would rise to new highs.

Below is a comparison of the two Dow bull markets since the beginning of the global monetary order created in 1944 (charts from Yahoo Finance):

 

Comparison of Dow Bull Markets

Comparison of Dow Bull Markets

The top chart shows the Dow from 1980 to 2013, and the bottom chart shows the Dow from 1944 to 1982.

The Bretton Woods agreement was in full use during the majority of the first bull market. It was altered only in 1971, when the link between the dollar and gold, at a fixed $35 per ounce, was severed. Also, by 1973, the fixed exchange rate system created by the Bretton Woods Agreement became a floating exchange rate system.

During this bull market (1944 to 1970s) interest rates were rising, until it peaked in 1981. The Dow rose 7.5 times in value from 1944 to 1973. The gold bull market started toward the end of the Dow bull market, taking gold from $35 to $850 in 1980 – a 24 fold increase.

The second (of the last two) bull market started at about 1980, and took place during a time of falling interest rates and an altered Bretton Woods Agreement. With more favourable conditions than the previous bull market, the Dow was able to rise 18 fold from 1980 to the current high.

Gold’ high of $1920, for this bull market is 7.68 times the low of $250.Will gold have a more significant increase compared to its 24.8 fold increase, due to the fact that the Dow’s increase was more than its previous bull market increase? Furthermore, will gold increase more it did during the 70s, given the fact that the conditions for the current bull market (especially as regards to debt levels) are far more favourable. If gold only matches its 1970s bull market increase, it could go to $6 200 ($250*24.8).

Consider that the Dow had a fairly steady rise throughout its entire bull market (that started in the 40s), whereas the gold price rose violently towards the end of its entire bull market of the 70s, with a parabolic blow-off top. See chart, below:

Comparison of Dow and Gold Bull Market

Comparison of Dow and Gold Bull Market

This indicates the likelihood that we are still missing a parabolic blow-off before we can call the end of this bull market; a type of rally that doubles the price of gold, as a minimum, during a 6-month period.

This cycle since about 1944, started with the creation of this global monetary order, and will likely end with the collapse of it. In fact, 2014 will be exactly 70 years since the creation of this dishonest system. We might have a perfect cycle of judgement, if the current monetary order collapses next year. Due to the imminent threat of collapse, it is essential to be invested in physical gold, since it is the perfect alternative to the current monetary regime.

It appears that we are on the verge of the worst part of this crisis. Our attention has to be on the stock markets. When the Dow reaches that “tipping-point” it will signal the start of the end. Previously, I have shown how it appears that the Dow is coming to that critical point.

There is a major risk aversion coming, and in the short-term this is likely to put downward pressure on gold. However, gold will find a footing, and will be driven higher by this very risk aversion. In other words, there is a deflation coming, and gold will prove to be the currency of choice.

For more of this kind of analysis on silver and gold, you are welcome to subscribe to my premium service. I have also recently completed a Long-term Silver Fractal Analysis Report .

Hubert

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

Gold and Silver Forecast 2013

Gold & Silver Forecast: Possible Target For The Bottom In Gold

Gold Forecast 2013 – Silver Forecast 2013

The recent drop in gold and silver is not critical to buyers of physical metals. Instead, it is an opportunity – to buy more at lower prices; at worst, it is an irritation, since it means a longer wait. It would likely be critical only if the gold bull market is over, and prices do not rise higher than the 2011 highs for many years.

If you are buying paper gold (especially leveraged), then a drop like the current drop is likely to be critical. On top of that, the ride is almost guaranteed to remain painful, even if gold moves to $5000 over the next 2 years, due to extreme volatility.

It is important to try to identify good opportunities to buy more gold and silver (at the lowest prices), and to stay invested, for the most part of the bull market. This is what my premium service focuses on. Selling would only become an issue when the bull market is at an end (close to the top).

So, has the gold bull market come to an end?

In my previous article, I have provided an analysis of whether I think this gold bull market is over or not, using the relationship between the Dow and gold. Based on that analysis, it is unlikely that both the Dow and gold are going to make new significant all-time highs from here. We, therefore, have to decide whether it is equities that will continue a bull market from here, or gold.

Gold

Let’s look at gold patterns to see if we can find a possible level for the bottom. Below is a 7-year gold chart:

gold 6 year fractal

The first thing I would like to point out is the fact that a drop to the $1000 is possible. I do not believe that it is probable, however. If it goes to $1000 level, then it is unlikely that it will go there soon, as part of this drop. It would probably take a couple of years to get there, in such a case.

What is interesting; however, is the fact that if gold does a bottom similar to 1976, it would go to around $1000. That is a 60% decline of the move from the bottom of this bull market ($250) to the top at $1920.

Note that a drop below $1000 would probably mean that the gold bull market is over.

A bottom of $1300 is the call that I am going with. It is consistent with where I think the gold market is. I believe we are close to a major rally, very similar to the 1973 and 1979 gold rally. If this is the case, then there should be a very bullish pattern present on the gold chart.

The patterns that I have highlighted in red are the most bullish patterns I know. It is not a conventional pattern like those seen with traditional technical analysis. Based on the standard dimensions of this pattern, we should get an ideal bottom at $1300. If gold does not go lower than the $1300 level, over the next couple of weeks, then this pattern could be valid. If the pattern is valid, then gold will rally like it did in 1973 and 1979.

Also, I believe that the drop below $1522 is still part of the consolidating pattern since 2011, and not a break-down of that pattern. In other words, it is similar to the 2006/2007 and 2008/2009 consolidations, but with its major low right at the end, instead of at the beginning or close to the middle.

The $1300 level also represents a 50% retracement of the move from the $680 level in 2008, to the top at $1920. This is similar to the retracement we had in 1973, before the big rally.

There are some other indicators that suggest that we are close to the bottom, which I will share with my subscribers.

For more of this kind of analysis on silver and gold, you are welcome to subscribe to my premium service. I have also recently completed a Long-term Silver Fractal Analysis Report .

Hubert

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

Gold and Silver Forecast 2013

Gold & Silver Forecast 2013: Like 1973, Dow’s Decline To Bring Massive Gold Rally?

Gold and Silver Forecast 2013

For gold to rise to levels significantly higher than the recent high of $1920, a new impetus is needed. Without additional energy from such an impetus, gold could just trade sideways for a very long time, or even fall further.

There is only so much value in the world economy, and it is split between all the different instruments (like gold, silver, stocks bonds, etc.) where value resides.

For gold (and silver) to rise significantly, relative to other instruments of value, value will have to be diverted away from those other competing instruments. The Dow, in particular, has been the biggest obstacle to a rise in precious metals, due to it sucking up most of the available value on global markets.

It is for this reason that the direction of the Dow is an important indicator of where gold will go over the next months. Analysis of the Dow itself, as well as, the Dow/Gold ratio is therefore, essential.

Dow/Gold Ratio

Previously, I have illustrated how, since the 1930’s, the Dow/Gold ratio level of 10 has been a pivotal point from where either the gold price rose significantly or the Dow. On Friday, the Dow/Gold ratio again hit that important level of 10.

The question, therefore, is whether it is gold or the Dow that will significantly rally from around this area? Below is a long-term Dow/Gold ratio chart:

1

I have drawn a yellow line at the 10 level. In 1995, when the ratio moved away from the 10 level, it was higher, and it was the Dow that started a massive rally. It was in 2008 at the end of the gold correction that the ratio hit the 10 level again.

It is almost certain that this ratio will move significantly from here, and in my opinion; it is gold that is heavily favoured. Technically, it appears that at the end of 2008 the ratio dropped lower than the important level of 10, which acted as some kind of support level. It is now busy completing the retest of that breakdown, and should the area around the 10 level hold; it will likely go into a free-fall (that is much lower than 10).

Dow & Gold

The Dow has just recently made an all-time high, and to many, it might appear that this is a start of a multi-month rally. However, the enormous debt-levels will virtually ensure that this rally is brought to an abrupt end very soon.

The Dow is making similar patterns to that of the 70s except for debt levels relative to GDP being much higher today than that of the 70s. Those patterns also indicate that the Dow’s current rally is likely to come to an end, leading to a possible crash.

Below, is one of the comparisons between the current period and the 70s, I have done for the Dow:

2

Dow 70s

3

Dow current

The top chart is the Dow from 1968 to 1974, and the bottom one is the Dow from 2008 to April 2013. I have illustrated how these patterns are alike by marking similar points from 1 to 6. If this comparison is valid, then the Dow could top very soon and start a severe decline.

The problem is that it is impossible to predict the exact level or time where the Dow will top. However, there is a good chance the top could be in this month; given the fact the Dow/Gold ratio has reached that important 10 level.

If we do get the decline in the Dow, similar to the 70s pattern, then it is possible that it could be much more severe than that of the 70s due to the extreme debt levels today. During that massive Decline of the Dow, gold actually did very well. See chart below:

gold vs dow 1970s

gold vs dow 1970s

I have compared the gold chart (top) from 1970 to 1975 to the Dow chart (bottom) for the same period. From the beginning of 1973, the Dow started a massive drop, while gold started a huge rally.

Today, gold is in a similar position to that of the end of 1972 to the beginning of 1973 (point 1). Then, the price was in a consolidation that started when gold reached an all-time high of $70 (point a). While gold was getting near the end of its consolidation, the Dow was making all-time highs just like today – see point 1.1.

I am sure many were thinking that the gold price would decline back to the $35 level, while the Dow’s rally continues. That did not happen; in a similar manner, gold will likely not decline much further.

I do not know at what level the gold price decline will stop, but it is likely to be very soon, and it is likely to turnaround in a dramatic fashion. Just like in 1973, the gold bull market is not over. There are a few important signals that will confirm the coming rally in gold and silver. I will be sharing more relevant information regarding these markets with my subscribers over the next couple of days.

For more of this kind of analysis on silver and gold, you are welcome to subscribe to my premium service. I have also recently completed a Long-term Silver Fractal Analysis Report .

Hubert

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

Silver Forecast 2013

Silver Price Forecast 2013 and beyond: Is Silver Fast On Its Way To $50?

Silver Price Forecast 2013: Is Silver Fast On Its Way To $50?

By Hubert Moolman

There is not just a similarity in how gold and silver trade at the same time period, but also how they trade at similar milestones, despite the fact that those milestones are sometimes reached at different times. This can cause silver or gold to be the leading indicator, depending on the particular milestone. The 1980 peak for both gold and silver is definitely an important milestone. For this 1980 milestone, gold is undoubtedly the leading indicator (since gold has already passed its 1980 high), so it could help us to project what silver might do around this milestone.

Market conditions often cause silver to fall behind gold, for quite some time, where after, silver normally catches-up in a big way. The fact that silver is still caught-up in a trading range lower than its 1980 high, at least four years longer than gold already, provides a classic opportunity for silver to follow that “catching-up pattern” and zoom to multiples of its 1980 high. In my opinion, silver will do just that and move much faster than gold in percentage terms, over the next months.

With gold having passed $1700 (twice the 1980 high of $850) already, given the above analysis, it stands to reason that $100 (twice the 1980 high of $50) silver could be virtually guaranteed.

Below, are two charts that show how gold and silver reacted before and after again reaching their respective 1980 highs:

silver vs gold

silver vs gold

Gold and silver made similar patterns before and after reaching their respective 1980 highs. From the charts, you can see there is a similarity in how gold and silver approached their 1980 high. Both made a triangle-type pattern just before they reached their respective 1980 all-time highs. When price came out of those triangle patterns, it rallied strongly to the 1980 highs, which started the formation of flag-type (pennant) patterns.

Gold passed its 1980 all-time high during 2008, while silver is yet to do so. By looking at the pattern of how gold passed its 1980 high, we can predict how silver might do it as well. If silver continues to follow the pattern that gold formed, then we can expect a massive spike towards the $50 and beyond, very soon. We are very likely in that move to $50, given that the silver price has broken out of the pennant to the up-side. My  long-term silver fractal analysis report  provides more details on what levels silver is likely to reach over the next years.

The $50 level can be compared to the water level, when you hold a beach ball under water and it starts moving upwards. When it passes the water level, it will move faster since it will now only have air as resistance, instead of water.

For more of this kind of analysis on silver and gold, you are welcome to subscribe to premium service.

Hubert

https://hubertmoolman.wordpress.com

Silver Price Forecast: The Great Silver Chart

Silver Price Forecast: The Great Silver Chart

A reader asked me to update a previous long-term silver chart of mine. Below, is the updated long- term chart for silver:

 

silver chart analysis

Since the last chart, silver has broken out of the pennant formation (on the short-term chart), and is looking really good.

On the chart, I have highlighted two fractals (or patterns), marked 1 to 3, which appear similar. What makes these two fractals so special, is the similarity of the circumstances in which they exist.

There was a significant peak in the Dow (1973 and 2007) between point 1 and 2 of both fractals. Also, point 1 on both fractals represents a significant bottom for silver after the peak of the Dow/Gold ratio.  After point 2, on both fractals, the oil price made a significant peak (1974 and 2008), about 8 years after the peak in the Dow/Gold ratio.

Thanks to this similarity in events, as well as the similarity in sequence, I was able to identify the great possibility for significantly higher silver prices, back in October of 2010. This was a very clear signal that higher silver prices were coming, and that is exactly what we got, when silver moved to $49. However, this run is not over yet. The move from $17, when silver broke out of the triangle (at point 3 of the second fractal) to $49 was just the first part of the move. In my opinion the biggest and best part of this move is still ahead. In my long-term fractal analysis report on silver, I have presented a lot of technical and fundamental evidence to support my opinion for higher silver prices over the coming years.

Based on the fractals on the chart, we could still have about two years before we could get a top like we had in 1980. That is 14 years after the Dow/Gold ratio top (beginning of 1966 to the beginning  of 1980 vs the end of 1999 to the end 2013).

It is interesting to note that the peak in silver (beginning of 1974) after the peak in the Dow/Gold ratio (beginning 1966) came about 8 years after the Dow/Gold ratio peak. On the current pattern, the 2008 peak in silver was also about 8 year after the Dow/Gold ratio peak at the end of 1999.

With the first peaks after the Dow/Gold ratio top taking the same amount of years, what are the chances that the second peaks will also correlate, giving as a top in silver at the end of 2013 to the beginning of 2014?

Also, from a price point of view, there is also an indication that this move is not over yet. If the two patterns indicated continue their similarity, it would be reasonable to expect the final top of the current pattern to at least go higher than $140 as a minimum. Why? If you measure the price movement from point 1 to point 2, in the first pattern, and compare it to the price movement from point 4 to 5, in the first pattern, you will find that the movement from point 4 to 5 is at least 7.6 times larger.

Currently the movement from 4 to the $49 in April of 2011 is only about 1.65 times larger than the movement from point 1 to 2. If it follows the first pattern, and grows at least 7.6 times larger, it will comfortably pass $140.

For more of this kind of analysis on silver and gold, you are welcome to subscribe to my free silver and gold newsletter or premium service. I have also recently completed a Long-term Silver Fractal Analysis Report .

Hubert

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

Silver Price Forecast: The Greatest Silver Chart Of All-Time

Silver Price Forecast: The Greatest Silver Chart Of All-Time – not my title, but of a reader who asked me to update my long-term silver chart.

For more of this kind of analysis on silver and gold, you are welcome to subscribe to my free silver and gold newsletter or premium service. I have also recently completed a Long-term Silver Fractal Analysis Report .

Hubert
hubert@hgmandassociates.co.za

Silver Price Forecast – Silver Premium Update August 2012

Silver Update

By Hubert Moolman

The silver chart has formed a big pennant like that of the gold chart. What this indicates is that the silver price will likely make a massive move soon. Technically, this move can be up or down. Note that this update is from my premium service originally published on 6 August 2012.

Below is a silver chart with the pennant:

silver chart forecast

The technical and fundamental evidence that I have collected, and look at, tells me that the price is likely to go upward out of this pennant formation.

On the chart above, you can see that the price has actually broken out (upward) of the pennant. We have to give it some time before we can say that it is a valid breakout. Also, I have drawn a blue line, which could become another area of resistance.

If we were to consider a move down, then a first target of $15 and one lower at $5 would come into play, based on the patterns. A price of $5 (and even $15) does not make any economic sense, given the amounts of fiat money currently available.

However, there is a real threat of deflation, currently, and the effect of this has to be considered when looking at the future silver price. In my opinion, we do have a perfect setup for a massive deflation which will destroy a lot of debt-based value.

Stock market values have been driven for years by this debt-based value, and will, therefore, be very badly devalued. Many believe that such a fall in stock market values will take down the silver price. I do not agree, and have given many reasons why.

Here, I would just like to point out that the current threat of deflation is due to the massive debt levels, and the inability to service those debt commitments. You can just look at the example of Spain or Greece.

Silver is a real store of value and that is its most significant function. The current crisis will cause a massive rush to that which can store value that will not be destroyed by the debt-collapse. Silver is just about the opposite of debt.

Previously, I wrote about how this debt-based monetary system has created what I call a “mirror-effect”, whereby, silver (and gold) is pushed down in value, to a similar extent as to which paper assets such as general stocks are pushed up in value. This mirror-effect clearly shows up on the long-term charts of gold, silver and the Dow.

Below, is a long–term silver chart (real and nominal) from 1850 to present (generated at minefund.com):

I have drawn a vertical red line, approximately where silver was demonetized (1870s). Notice how the real price of silver collapsed after the red line, from about $30, until it bottomed in 1931 at $4.29. It then traded side-ways (from the big-picture view) for many years, until it spiked from about the early 1970s, making a peak in 1980, where after, it bottomed again in 2001.

Technically, the bottom in 2001 was the completion of what would be a remarkable double bottom reversal, with the first bottom being in 1931. After a double bottom formation, there is often a big rally, and that is exactly what happened next. If this pattern continues to follow the pattern of a valid double bottom, it will reach levels that will exceed the 1980 high by at least one multiple, but probably by many more.

The interesting thing about this possible double bottom is the fact that the two bottoms came 70 years apart. This 70 years period also appears on the long-term Dow chart. Below is a Dow chart (from stockcharts.com) from 1900 to present:

On the chart, I have indicated a 70 year period from when the Dow peaked in 1929, to the peak in 1999. The reason for using the 1999 peak instead of the 2007 peak, is the fact that the 1999 peak represents the real peak, since the Dow/Gold ratio peaked in 1999 (like it did in 1929).

Notice the dates of the peaks and how they fit in with that of the bottoms of the real silver price, as well as the similar 70 year periods between. In my opinion, the occurrence of the 70 year period on both charts, in the context as explained above, provides additional evidence of the link between silver’s demonetization (or suppression) and the massive debt bubble of this century – as explained in part 1 of this article.

While the Dow is inflated to the peak in 1929, silver is suppressed to its low in 1931. And again, the Dow is inflated to its peak in 1999, while silver is suppressed to its bottom in 2001.

So, the peaks and troughs, as presented in the above charts, are the manifestation (in visual form) of the debt-based monetary system causing paper and related assets to rise, while suppressing silver. Another way of looking at it is that the debt-based monetary system is fuelling speculation in paper assets by using energy diverted from precious metals.

Silver (like gold) stands in direct opposition to the current monetary system (they are inescapably linked). The fall (and falling) of this system is the rise of silver as money; therefore, massive increases in what silver can buy in real terms.

Looking at a bearish pattern to find critical levels

Below, is 6-year chart of silver, highlighting bearish fractals:

I have highlighted two fractals by indicating 4 similar points on both. Based on this comparison, we could now be at a very critical area. A break-down below the support (about $26), could mean that the current pattern could follow the 2007/2008 pattern, and take price much lower. This is presented not because I believe that price will break lower than the support, but to show why I think we are at a critical level, and why we should be watchfull.

Pattern Previously Covered

Here, is a follow-up on my previous article about the similar flag-type formations on the silver chart.Below is a graphic which compares the current pattern on silver (from about the beginning of 2011 to present) to a 2007 pattern:

This comparison is still very much valid; only if price goes lower than $26 could it become invalid. In fact, there is a good chance that price has broken out to the upside.

On both charts, I have suggested how the flag patterns might be similar, by marking similar points, from 1 to 6 (and alternatively from a to h). Based on this comparison, it appears that the silver price might now have found that point 6 or h (at the end of June), and is about to increase significantly.

We could be at very volatile area due to the possible breakout, since this is often the case after a breakout – so be aware! I am of the opinion that silver should make its move higher between now and the end of this month, if this comparison is to be confirmed.

Follow-up on Gold/Silver Ratio

In my last gold update, I covered the Gold/Silver ratio, and explained why I think the Gold/Silver ratio will soon fall straight down. Below is an updated Gold/Silver ratio chart:

On the chart I have indicated a trading channel in which the ratio has been moving for the last five months. It appears now to have finally broken down, out of the channel. This could be a very strong signal that silver and gold prices are about to rise significantly. Again, here we have to watch for a possible retest of that break-down area, before the ratio falls straight down.

Conclusion:

Silver appears to have broken out of the pennant or flag-type formation, and could now finally be setting-up for a massive rise in price. We should, however, be very watchful, due to the fact that we are at a critical area in price and time. There is a big threat of deflation, but, in my opinion, it is this very deflation (brought about by the collapse of the debt bubble) that could be driving silver prices higher.

For more of this kind of analysis on silver and gold, you are welcome to subscribe to my premium service. I have also recently completed a Long-term Silver Fractal Analysis Report .

Hubert

https://hubertmoolman.wordpress.com

hubert@hgmandassociates.co.za

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

Dow To Crash Soon?

Alternative Fractal on Dow Chart – this and the previous fractal suggest Dow to crash soon…

Image

For more on silver and gold see my latest premium update (Premium Service).

For long-term guidance on gold and silver, see my Long-term Silver Fractal Report  & Long-term Gold Fractal Report  .

Silver Price Forecast: Silver Could Preserve More Value Than Gold

Silver Offers A Golden Opportunity To Convert Soon To Be Destroyed Value

By Hubert Moolman

11 June 2012

The fundamentals for silver and gold are very strong, and with all the massive bailouts, which are increasing debt levels, they are just getting stronger. Until a significant portion of these debts is repaid or defaulted on, it would be foolish to talk about a top in precious metals.

The repayment of debt (or default on debt – which is more likely) will result in significantly reduced economic activity. Significantly reduced economic activity will have a negative effect on the stock market, which in this case, will likely result in a huge crash. It is these conditions (a deflating debt bubble) that will drive gold and silver prices significantly higher.

Why? Because this will not just be a normal type of reduced economic activity, but one in which the monetary system as a whole is questioned or collapses (due to the excessive debt levels).

 In a crisis like this, it will be all about preserving value, which will make gold and silver the most wanted goods. The excessive debt levels we have currently, mostly represent artificial value, or value that will never be realised. We now have a great opportunity to convert that soon to be destroyed value into real value, by buying gold and silver, with fiat currency.

In my opinion, silver bullion presents the better opportunity, when compared to gold. Silver bullion is still trading much lower than its 1980 high, and also at relatively historic lows against gold.

Silver Flag

Here, is a follow-up on my previous article about the similar flag formations on the silver chart. Below is a graphic which compares the current pattern on silver (from about the beginning of 2011 to present) to a 2007 pattern:

On both charts, I have suggested how the flag patterns might be similar, by marking similar points, from 1 to 6 (and alternatively from a to f). Based on this comparison, it appears that the silver price might now have found that point 6 or h, and is about to increase significantly. See my latest video on my website for more details of this analysis.

For more silver and gold analysis and guidance, see my Long-term Silver Fractal Report or subscribe to my Premium Service.

Warm regards,

Hubert Moolman

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

Silver Price Forecast: Silver Offers A Great Opportunity

For more of this kind of analysis on silver and gold, you are welcome to subscribe to my free newsletter or premium service. I have also recently completed a fractal analysis report for gold and silver.

Warm regards and God bless,

Hubert

(gold and silver newsletter)

Find me also at: picturegoldandsilver – gold and silver analysis contained in one image/picture

hubert@hgmandassociates.co.za

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

Silver Price Forecast: Dramatic Turnaround For Silver?

Silver price Forecast: Dramatic Turnaround For Silver?

18 May 2012

Here are a few patterns that might explain the current state of the silver price, as well as, provide the possible way forward.

Below is a 6-year chart of silver (all charts generated at fxstreet.com):

silver price forecast

On the chart, I have indicated two similar patterns (marked 1 to 5).This comparison suggests that silver could rise significantly over the next couple of months. This would mean that a dramatic turnaround in the price of silver is coming (it might have started already).

I have also drawn some red lines at the $10, $20, $30, and $50 level. These levels appear to have acted like key levels, where the price of silver has found support or resistance.

The interesting thing about these levels is the fact that they have a Fibonacci relationship. That is a ratio that is similar to the following Fibonacci numbers: 1, 2, 3, and 5. So, if the silver chart continues to follow this Fibonacci pattern, which is often the case, then the $50 level is a very important resistance. Also, if we go past the $50 level, then $80 could be the next significant level, since that will be the next area, if the Fibonacci ratio is to be applied. The $80 area could act as a support or a resistance.

Now, I would like to zoom-in to the last part of both patterns (about point 3 to 5 of both).

Below is a graphic which compares the current pattern on silver (from about the beginning of 2011 to present) to a 2007 pattern:

silver forecast

On both charts, I have suggested how the flag  patterns might be similar, by marking similar points, from 1 to 6 (and alternatively from a to f). Based on this comparison, it appears that the silver price is searching for that point 6 (or point f, which might be in already).

These patterns suggest that the current flag pattern (as previously suggested), is important for the future of the silver price. A breakout at the resistance line of the flag could mean that we will have a significant rally, and an eventual breakout at the $50.

For more silver and gold analysis and guidance, see my Long-term Silver Fractal Report  & Long-term Gold Fractal Report    or subscribe to my Premium Service.

Warm regards,

Hubert Moolman

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

Silver Price Forecast : Silver Market Update

Silver Price Forecast : Silver Market Update

Here are a few patterns that might explain the current state of the silver price, as well as, provide the possible way forward.

Below is a graphic which compares the current pattern on silver (from about the beginning of 2011 to present) to a 2007 pattern:

On both charts, I have suggested how the patterns might be similar, by marking similar points, from 1 to 6 (and alternatively from a to f). Based on this comparison, it appears that the silver price is searching for that point 6 (or point f). Previously, about more than 6 weeks ago (after the middle of March), I thought that point 6 (or point f) was already in, or close to being in.

This was my assumption, based on timing: On the 2007 pattern, you can see that from point d to point f was about 10 days, and that this was the same for point f to point h on the same pattern. When applying this to the current pattern, it was expected that point h would be in about 14 weeks after point f (about middle to end March) – similar to the 14 weeks from point 2 to point 4.

This was a reasonable expectation since the market often behaves in such a manner. However, it was the wrong expectation. It appears that the market has extended that cycle (which is not unusual); however, it appears that the bullish expectation is still very much justified. We would need a turnaround very soon though, to continue the mega bullish expectation. If we do not get the turnaround very soon, then price could go even lower than $26 (unlikely).

In my latest gold update, explained why I think this week might bring the bottom for gold. My analysis for silver also suggests that we could see a bottom for silver this week (for the latest next week).

I believe that it is very likely that we will get that massive rally soon.

For more silver and gold analysis and guidance, see my Long-term Silver Fractal Report  & Long-term Gold Fractal Report    or subscribe to my Premium Service.

Warm regards,

Hubert Moolman

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

Gold Price Forecast: Premium Gold Update

Gold Price Forecast: Gold Update

Here are a few patterns that might explain the current fall in the gold price, as well as, provide the possible way forward.

Below is a graphic (all charts are from fxstreet.com) which compares the current pattern on gold (about July 2011 to current) to a 2007 pattern:

On both charts, I have suggested how the patterns might be similar, by marking similar points, from 1 to 6. Based on this comparison, it appears that the gold price is searching for that point 6.

The bullish expectation is still very much justified. We would need a turnaround very soon though, to continue the mega bullish expectation. If we do not get the turnaround very soon, then price could go even lower than $1500.

The following graphic suggests that we could see a turnaround very soon. Below is the last part of the patterns presented in the above graphic (note that the current chart is weekly chart, while the 2007 is daily):

gold forecast 2012

On both charts, I have suggested how the patterns might be similar, by marking similar point, from 1 to 3. Based on this comparison, it appears that the gold price is searching for that point 3. The market, however, appears to have played a trick, which provides the possibility of an alternative comparison. The alternative comparison is indicated by point A to G on both charts. Notice that from point C to G, the chart appears to be rising on the 2007 chart, while falling on the current chart. This explains the reason for prices going lower than I expected.

Both alternatives suggest that the gold price is searching for that final point before starting a rally. However, what this comparison also suggests, is that from a timing point of view, point 3 or point G could be in soon (as soon as this week). On the 2007 pattern, from point 1 to point 2 was about 8 days, whereas from point B to G was about 9 days. If we apply the same ratio to the current pattern, then point G could be in on day 50.62. Today is day 50 since point B, so we are there or almost there.

If we do not get the turnaround rally soon, it could mean that we will go much lower than current levels. For now, I believe that it is more likely that we will get the rally soon.

For more silver and gold analysis and guidance, see my Long-term Silver Fractal Report  & Long-term Gold Fractal Report    or subscribe to my Premium Service.

Warm regards,

Hubert Moolman

For more silver and gold analysis and guidance, see my Long-term Silver Fractal Report  & Long-term Gold Fractal Report    or subscribe to my Premium Service.

Gold/Platinum Ratio And The Coming Depression

During the gold bull market of the 1970s, the Gold/Platinum ratio was in a significant uptrend. It went from about 0.2 to 1.4 over a 12-year period. That is a seven-fold increase. At the start of the current gold bull market (2001), the Gold/Platinum ratio was just a bit higher than 0.4. If the ratio was to emulate its performance during the last gold bull market, it could reach 2.8 (that is gold being 2.8 times the value of platinum).

Similar conditions to that of the 70s, which propelled gold and other commodities higher during the 70s, are present now. However, this time, due to the current higher debt levels relative to GDP, compared to that of the 70s, conditions are more in favour of gold than commodities like platinum (that are more reliant on economic activity).

In the chart below, you can see that debt levels relative to GDP were much lower than it was during the Great Depression, as well as what it is currently.

US Debt to GDP ratio

 

What this is telling me, is that we are going to have conditions that are more like the Great Depression, for the remaining part of this gold bull market. The economic decline, which will mainly come as a result of the debt bubble bursting, will negatively affect a commodity like platinum, when compared with gold.

Although commodities, like platinum, will outperform most asset classes over the next years, they will still depreciate significantly as compared to gold (and silver).

Gold/Platinum Ratio suggests much higher gold prices are coming

There is an interesting pattern developing on the Gold/Platinum Ratio. This pattern is similar to a pattern on the silver chart. Below, is a graphic which features the Gold/Platinum Ratio chart (top) as well as the silver chart (bottom) (charts courtesy of stockcharts.com):

 

gold platinum ratio similar to silver chart

The graphic is self-explanatory, and indicates that the Gold/Platinum Ratio is in a position similar to where silver was at the end of January 2011. If the ratio was to continue to follow the silver pattern, then we could have gold being 1.7 times the value of platinum in this year. This is consistent with my expectation of a significantly higher “real’ gold price (relative to stocks and most commodities).

Note, that it is more probable that an increase in the Gold/Platinum Ratio would mean higher nominal gold prices, instead of lower gold prices. This is due to the fact that the recent decline in the ratio corresponds more with the correction in the gold price, since September of last year.

For more of this kind of analysis to help you navigate the financial markets, subscribe to my premium service .

Warm regards and God bless,

Hubert

https://hubertmoolman.wordpress.com/

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

Gold/Platinum Ratio Suggests Much Higher Gold Prices Are Coming

Gold/Platinum Ratio suggests much higher gold prices are coming

There is an interesting pattern developing on the Gold/Platinum Ratio. This pattern is similar to a pattern on the silver chart.

Below, is a graphic which features the Gold/Platinum Ratio chart (top) as well as the silver chart (bottom):

 

gold platinum ratio similar to silver chart

 

The graphic is self-explanatory, and indicates that the Gold/Platinum Ratio is in a position similar to where silver was at the end of January 2011. If the ratio was to continue to follow the silver pattern, then we could have gold being 1.7 times the value of platinum in this year. This is consistent with my expectation of a significantly higher “real’ gold price (relative to stocks and most commodities).

Note, that it is more probable that an increase in the Gold/Platinum Ratio would mean higher nominal gold prices, instead of lower gold prices. This is due to the fact that the recent decline in the ratio corresponds more with the correction in the gold price, since September of last year.

So, the Gold/Platinum Ratio also supports significantly higher gold prices over the coming months.

For more of this kind of analysis, see my Long-term Silver Fractal Analysis Report , or subscribe to my premium service .

Warm regards and God bless,

Hubert

https://hubertmoolman.wordpress.com/

hubert@hgmandassociates.co.za

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