There appears to be far more downside risk in the S&P than in silver. Silver has had three bad years while the S&P has had five good years. It is time for both markets to reverse. Examine the following graph of Silver versus the Silver to S&P ratio. It tells me the ratio has returned to levels seen in 2008 and that the ratio follows the price of silver.
Tag: gold outlook
Gold’s progress was characterized by a sudden steepening of the curve leading to a final blow off when the price had gotten ahead of itself. We now need to see a similar occurrence take place during a sell off. However, this sell off, as torrid as it has been lacks that final spike down which occurs when even the most ardent bulls have had a guts full and finally throw the towel in. Gold and silver’s inability to sustain a decent rally suggests that it could re-visit and test its old June lows. Should this support fail to hold we could then experience a rather disorderly sell off taking gold back to the $1000/oz level.
I cannot see what would cause this market to break out of its current range at this time. The Dollar would either have to drop off sharply breaking down below 79 on the USDX or interest rates would have to plummet sharply here in the US, along with perhaps a larger selloff in the broader equity markets to take it up out of the top end of the range.
In this article, author Gary Christenson provides answers on ten very common questions about investing in precious metals (gold in particular) in 2014. With the gold price 40% off its peak, 2.5 years in a declining pattern on the chart, there are a lot of questions about the true value of gold investing. The answers, though, could be surprisingly simple, at least for those who are willing to see in an unbiased way.
Consequently, do not expect China to be a catalyst for establishing a gold-backed currency. It serves China best to allow the West to maintain its duplicitous control over gold and silver. With no country in a hurry to have a gold-backed currency, one of the biggest factors for seeing the price of gold sky-rocket is off the table. This factor is far more significant than all the demand statistics paraded each week by PM writers.
So far, 2014 has been a paradoxical year for gold. Many investors aren’t even aware that it has rallied almost 8%. On the rare occasion that the financial media mentions the yellow metal, it is only in the context of comparing the recent rise to last year’s decline. In spite of this overwhelming negative sentiment, gold is experiencing a stealth rally as one of the best performing assets of the year. Let’s look at some important metrics of the most under-valued sector in this market.
Gold, the national debt, and the “debt limit” have tracked each other fairly well since the year 2000. As you can see gold was “too high” in 2011, compared to the red line of national debt, and is now “too low.” However, we can depend upon congress to borrow and spend, and gold prices will rise to reflect that reality. In case you are interested, the data back to 1950 is similar – gold, the national debt, and the “debt limit” have followed each other, more or less, for over six decades. Is there any reason to expect this pattern to change?
The Cycle count still supports the possibility of a bullish Day 34 – 2nd DCL here. But in all honesty, it’s not a position one should be taking seriously here because it requires taking a considerable amount of risk. And even a DCL right here is no guarantee of strong performance. A 3rd Daily Cycle would need to rally almost $100 just to break new highs and the risk of it falling well short and topping early is very real.
The Golden Ratio has accurately predicted all the Gold major turning points these last thirty years and it seems reliable for making future projections. It is one of the techniques that can be used but the most important is to understand the structure and the rhythm of the market to forecast future developments not only in terms of the dimension of Price but also of the dimension of Time. In order to gain superior returns, it is essential to study the history of the market and to follow the price action.
Rick Rule, Chairman of Sprott Global Resource Investments Ltd., answered 10 questions on precious metals investing and gold miners. He says: “The gold price rally will not necessarily continue through 2014. But as an investor with an outlook of three-to-five years, I believe ownership of gold will be critical to maintaining your wealth in the next few years.”
The situation in Crimea shows how small events can escalate into a major crisis. I have no doubt in my mind that some government official somewhere stands to lose or make substantial amounts of money from the on-going turmoil. These types of people are not capable of creating wealth but are only able to use their positions of power to divert funds or steal tax payer’s money in order to enrich themselves. As I have stated countless time, the best protection against corrupt governments, geopolitical tensions, and expansionary monetary policies of central banks is gold and silver.
Up until today I was open to the idea that Gold has bottomed but if we don`t find support on near the daily RSI on gold then I think we`re heading back to the lows. It`s too early to make that conclusion as Gold will at least have an attempt to take our recent highs and if it fails there then it`s going to be tough for gold traders. If it breaks and closes above that level then this will likely trade up to the $1400-1460 range before any meaningful resistance.
This is not to say that gold will inevitably move lower in the days and months ahead. We only point out that history has shown that a golden cross has mostly not resulted in significantly higher prices, except in some exceptional cases. On the other hand, the correction of the last two years has been rather exceptional, which is in favor of at least a technical recovery of gold. So the signals are mixed for the time being. It is critical to monitor the reaction of technical and sentiment indicators on ongoing price evolution in the weeks and months ahead.
Only time will tell whether gold has established a long term bottom and which factors have been driving the trend change. But, from our perspective, we believe that all of the above are increasingly driving gold’s price higher, a trend which will only intensify.
The chart of gold prices since the year 2000 (log scale) shows a “megaphone pattern” of higher lows and higher highs. Currently the gold price is near the bottom of the exponentially up-trending pattern. Short term prices could rise or fall a little from here, but gold prices should be much higher in 2015 and 2016. Gold is for savings and investing, not trading. Dollars buy groceries while gold buys safety, insurance and peace of mind.