by: Dave Banister- TheMarketTrendForecast.com
Last August I penned an article predicting a massive five year bull run in gold and gold stocks. I outlined my reasoning and compared this 13 year period from 2001 to 2014 to the tech stock bull from 1986-1999. .
In February of this year, I again wrote an article for Kitco.com explaining the 13 year Gold Bull still had a lot more room to run. At the time Gold had pulled back to 1040-1070 windows and I mentioned that “smart money would be accumulating” and we should look for $1300-$1325 as the objective. That brings up forward to October of 2010, with Gold running to $1350 as recently as this morning.
We have a huge rally because we are in the 2nd year of this final 5 year run I predicted, and this is when the general investing public becomes “aware” of the bull market. They miss the first five years from 2001-2006, and then while we consolidate for three years from 2006-2009 they fall asleep. It is not until Gold breaks all time highs that people wake up and start buying. This is typical in a super bull cycle, the behavioral patterns are always the same with the herd. I based my forecast on herd mentality, whether bullish or bearish.
I am now looking for Gold to continue to run during this trampling into the asset from the herds of investors to about $1480-$1520 on this leg before we have a strong correction. That figure is not taken out of the thin air, it’s an Elliott Wave based pattern that I recognize and forecast in advance. Subscribers to my website are exposed to my outside the box forecasts on the SP 500 and Gold all the time. Usually it starts with them not believing, and later they wonder how I arrived at the predictions. To wit, on August 30th I predicted a huge breakout in Silver to $26-$29 per ounce when it was at $18.75 per ounce. This was purely based on the Elliott Wave pattern and the lack of awareness by the investing public at the time of the Silver bull. It is also “poor man’s Gold”, and as simple as that sounds, it is what drives the herd of investors to invest. Look for Silver to continue higher to those target zones before correcting.
Many investors who are briefly exposed to Elliott Wave Theory assume that a certain well known forecaster must be the only person in the world who uses it. Since he is wrong more often than he is right, people toss out Elliott Waves as mad science. That is a mistake and why I continually write articles for Kitco using my Elliott Wave methods to forecast SP 500 and Gold moves in advance. Look for Gold and Gold stocks to continue powering higher than people can imagine over the next four years, and pick up some darts and throw them at some juniors while you’re at it.
You can check out our forecast service at www.MarketTrendForecast.com, consider subscribing ahead of our rate increase as well. Best to you and your trading!
The following is a summary of an article that was taken from Market Force Analysis’s website where they did a simple linear regression comparing gold and silver for the past 7 years. The study has definitely confirmed what most traders have known for these past few years…that gold and silver were heavily correlated in these past 7 years, but the data also brings up suspicion that this relationship between gold and silver is actually heavily algorithmic due to the high r-squared of > 0.91 for the past 3 yrs and an r-squared of 0.96 for 2003-2008…almost perfect correlation for two metals that have different functionality and market uses. It’s a heavily programmed trade that does not correlate the fundamental pricing of the commodity itself, as both metals are heavily “suppressed” by the industry’s heavy algorithmic trading schemes. The regression below displays the cross-plot between silver and gold. The black line is from 2003-2008 and the green line is from 2008-2010.
The current trend that we are seeing in silver might be a first sign of de-leveraging (well, actually de-correlating) from gold, and might finally make for a better trading opportunity than gold.
Read the article here.