• 322 days Could Crypto Overtake Traditional Investment?
  • 327 days Americans Still Quitting Jobs At Record Pace
  • 329 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 332 days Is The Dollar Too Strong?
  • 332 days Big Tech Disappoints Investors on Earnings Calls
  • 333 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 335 days China Is Quietly Trying To Distance Itself From Russia
  • 335 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 339 days Crypto Investors Won Big In 2021
  • 339 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 340 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 342 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 343 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 346 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 347 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 347 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 349 days Are NFTs About To Take Over Gaming?
  • 350 days Europe’s Economy Is On The Brink As Putin’s War Escalates
  • 353 days What’s Causing Inflation In The United States?
  • 354 days Intel Joins Russian Exodus as Chip Shortage Digs In
Is The Bull Market On Its Last Legs?

Is The Bull Market On Its Last Legs?

This aging bull market may…

Trade In Counterfeit Goods Hits Half A Trillion Dollars

Trade In Counterfeit Goods Hits Half A Trillion Dollars

The counterfeit market has breached…

The Problem With Modern Monetary Theory

The Problem With Modern Monetary Theory

Modern monetary theory has been…

  1. Home
  2. Markets
  3. Other

Gold 1980: 'Deja Vu'?

Have you ever experienced a "Deja Vu" feeling? Well, if you have never experienced one, maybe after reading this post you will.

Let's start with a technical chart of Gold. These days, gold is holding up strongly, and is only $80 below its all-time high.

If this continues, we might consolidate for a couple of weeks, to work off the overbought condition of the MACD indicator.


Chart: Prorealtime

Now have a look at the following Chart:


Chart: Prorealtime

The chart above is the gold price in 1970, right before it more than doubled 2 months later.

Don't they look very similar? To show you, I will now place one chart on top of the other one:


Chart: Prorealtime

Well, since Gold is acting very much like in the seventies, let's see what happened after... Based on this chart, Gold could consolidate until mid-late October, and then Double again in the weeks/months following.

As of late, the shares of mining companies have been lagging the Gold price Big time!

However, as we can see in the chart below, the mining shares (represented by the Barron's Gold Mining Index) follow the gold price nicely over time. It looks like the Mining companies are breaking out of a multi-decade long consolidation pattern:

When we measure the BGMI (Barron's Gold Mining Index) in Gold, we can plot the outperformance or underperformance of Gold stocks compared to Physical Gold. A falling ratio means Gold stocks Underperform Gold, or equivalently, Gold outperforms Gold stocks.

Notice that the gold stocks were also underperforming gold before the top of 1980!

The following chart is the same chart as above, but now with some support and resistance lines.

However, the most interesting observation is that as gold peaked in 1980, the Mining Stocks first retreated along with Gold, but then doubled in the months that followed, while gold did not make a new high until 2008!

What will happen to Silver if Gold doubles over the next couple of months?

If history is any guide, silver will also rally substantially.

At the top of 1980, on January 21st, ONE ounce of Silver was 4.79% of the price of ONE ounce of Gold. Right now it is only 2.28% of the price of Gold. So if Gold is about to double from here, Silver should at least double as well, and if we would get back to the high of 1980 (Silver Price as a % of the Gold Price), Silver could potentially more than QUADRUPLE from here...

 


If you are interested in similar analyses and you would like to know which mining stocks I buy at which prices, go to www.profitimes.com and subscribe now, because it seems we have one of the best times ahead of us!

Although the markets plummeted recently, our portfolio is actually UP!

 

Back to homepage

Leave a comment

Leave a comment