• 2 days Bitcoin Lives Up To Its Safe Haven Status In A Big Way
  • 2 days 14 Million People Will Lose Unemployment Benefits On December 31st
  • 4 days Why 12 Million American Millionaires Isn’t Good News
  • 5 days Big Oil Is Paying The Price For Investing In Renewables
  • 6 days The Banking Industry’s $35 Billion Gravy Train Could Disappear
  • 7 days Did Amazon Just Democratize Prescription Drugs?
  • 8 days The Private Space Race Just Got Very Real
  • 10 days Short Sellers Are Willing Big In This Turbulent Market
  • 11 days SpaceX Gets Go-Ahead To Send Humans Into Space
  • 12 days Saudi Arabia Lost $27 Billion In Oil Crash
  • 13 days China’s Big Tech Takes A Hit As Regulators Crack Down
  • 14 days Black Friday Could Be Retailers’ Only Hope
  • 15 days Why You Should Not Dump Your Stay At Home Stocks Just Yet
  • 16 days The Real Reason Why Uber And Lyft Stocks Have Soared Nearly 50%
  • 18 days Bitcoin Heads Towards $16,000 And No One’s Cashing In
  • 19 days Elon Musk’s $250 Tesla Tequila Is Already Sold Out
  • 20 days Will The San Francisco Wealth Tax Spark An Exodus Of The Rich?
  • 21 days The Fin-Tech IPO Of The Century Just Got Crushed
  • 22 days UK Bookies Report Largest-Ever Political Bet Ahead Of Election Results
  • 23 days Better Safe Than Sorry: 5 Alternative Investment Plays
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