• 1 min Trump Wants Another $2 Trillion Economic Intervention
  • 18 hours The Surprising Businesses Deemed “Essential” During The Coronavirus Lockdown
  • 22 hours Priceless Van Gogh "Spring Garden" Painting Stolen
  • 1 day Oil Falls To $20 For First Time In Nearly Two Decades
  • 1 day COVID-19 Could Be The End Of U.S. Coal
  • 2 days How Much Does Your Social Security Number Cost? $4 On The Dark Web
  • 3 days Silver Stocks Have Been Decimated In The Coronavirus Sell-Off
  • 4 days How Blockchain Tech Could Make Mergers And Acquisitions More Efficient
  • 4 days America’s Shortage Of This Metal Keeps Trump Up At Night
  • 5 days Bidet Bonanza: Defying The Toilet Paper Shortage
  • 5 days U.S. Auto Sales Fall By 75%
  • 6 days Violating Quarantine? Big Brother Is Watching
  • 6 days Does Gold Still Have Some Room To Run?
  • 6 days Major Acquisition Gives The World’s First Green Ride-Share Another Edge
  • 7 days U.S. Pushes For Digital Currency For Immediate Stimulus
  • 7 days The Impossible Challenges Created By Growing Population
  • 7 days Gold Skyrockets After Fed Pledges "Unlimited" Cash To Boost Economy
  • 8 days World’s Richest Lose $1 Trillion In Stock Market Rout
  • 8 days Gas Stations Shut Down In Venezuela As Coronavirus Crisis Intensifies
  • 8 days The Best And Worse Case Scenario For The U.S. Stock Market
How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

What's Behind The Global EV Sales Slowdown?

What's Behind The Global EV Sales Slowdown?

An economic slowdown in many…

  1. Home
  2. Markets
  3. Other

These Conditions Ensure That Gold Stocks Will Continue To Rise Over The Coming Years

Gold stocks need very specific conditions in order to perform well. The last time most of these conditions were present was during the Great Depression. However, conditions are currently shaping up to be even more ideal.

The performance of the Dow is one example of conditions that heavily influences how gold stocks fair.

Historically, gold stocks had some of the best rallies after significant Dow peaks. This was true for the 1929 and 1973 major Dow peaks.

Given the above, I would make sense to say that the 2015 Dow peak is an important signal for significantly higher gold stock prices over the coming years. Below, is a long-term chart of the Barron's Gold Mining Index (BGMI) that illustrates some of the conditions ideal for a gold stocks rally:

BGMI Index Weekly Chart since 1940
Larger Image

On the chart, I have marked two patterns from 1 to 4, by highlighting certain significant financial events. Point 1 on both patterns is the turnaround point for interest rates. On the older pattern, it was the point where interest rates started to increase, whereas on the newer pattern it was a point where interest rates started to decrease.

Point 2 on both patterns is the final Dow bottom just before a major rally, or a point where the Dow broke out. Notice how gold stocks started a fake rally (from around point 2) in both cases. They started a rally, promising a new bull market, but soon they diverge from the general stock market (which continued on a long-term rally).

Point 3 on both charts is the Dow/Gold ratio peak. This represents a signal that the tide is "soon" turning, from favouring general stocks to favouring gold stocks.

Point 4 on both charts is the major peak for the Dow. After point 4, the "real" gold stocks rally starts. The recent rally of gold stocks is a confirmation of this. This rally will outperform the 1970s rally by a large margin, due to the more ideal conditions with regard to commodity prices, debt levels, the economy, etc. (more detail in my gold mining fractal analysis report) that are currently present.

Warm regards,

 


For more on this and this kind of fractal analysis of gold and silver, you are welcome to subscribe to my premium service. I have also recently completed a Gold Mining Fractal Analysis Report as well as a Silver Fractal Analysis Report.

 

Back to homepage

Leave a comment

Leave a comment