Gold: History Doesn’t Repeat Itself, but It Does Rhyme

Mark Twain wasn’t writing about the gold market when he made his famous quote about historical recurrence, but he could have been, as the gold market has been "rhyming" every 21 months. Every 21 months there has been a major peak in the gold market, going back to the start of this bull market, over 13 years ago. Gold is now 8 months from the next scheduled 21-month peak, which should arrive in July 2013. The gains in each cycle have ranged between 80% and 97%, from the low of each cycle up to the top. This is surprisingly little variation, at least as far as financial markets are concerned. This is about as steady as it ever gets. If it happens again, gold will be around $2,700 in mid-2013. So far this particular 21-month cycle is tracking well and it looks like gold is primed and ready for launch into the final major growth phase. This chart shows the monthly fr   More...

Monthly Gold Pattern Remains Bullish

The big patterns in markets play out on a time-scale that is not intuitive for the human mind, as our "quotidian lives" play out on a day-to-day basis. So often we lose sight of the most important patterns – the really long-term ones, on the monthly chart. Gold's monthly chart is telling a vastly different story than the one we're getting from gold on a day-to-day basis. Right now in the short-term it feels like gold is stuck in the dumps, or to put it more charitably, stuck in the doldrums. Gold can't maintain any sort of upside momentum, as it's been rare to even see gold go up 2 days in a row, much less 2 weeks in a row. In fact, it's been nearly 6 months -- 6 months! -- since gold has been able to string together two weeks in a row to the upside. But in spite of this, the monthly pattern is still in very good shape. On this longer time-frame gold is merely comple   More...

Manipulated Markets Can't See the Future

Right now we are all in the unfortunate position of being hostage to the dubious forecasting abilities of the Fed and other Central Bankers, as if they are not proactive in putting in place another round of easing, just about every financial market will plunge. Even though it seems like they've done so much already -- and there is political pressure on them to let up -- once they started down this path then there was no choice but to keep increasing the flow of new currency. This is a big monetary experiment spiraling out of control. There is little doubt that gold will be much higher into the cycle peak scheduled for mid-2013, but there is cause for concern about a hyper-deflationary episode prior to that run up, similar to the Lehman debacle in late 2008. Of course markets will rally right back when the Fed reacts with a huge liquidity push, but once the chaos starts, the damage will   More...

The Best Buying Opportunity of the Last 10 Years

Most investors are aware that the "crowd is always wrong" when it comes to financial markets. With the big peak in gold only 15 months away, the crowd of gold traders and investors are about as wrong now as they ever get.   According to this composite indicator of sentiment in the gold market, there has only been one other time when gold has hit this extreme level of negativity, back at the late December low a few months ago. That sentiment extreme was the direct precursor to a $240 rally in just one month. So not only is the situation right for an explosive rally, it’s an even better set-up than at that low, because now a highly bullish "sentiment divergence" has developed. Negative sentiment is hitting the same extremes as the prior low, but with one crucial difference -- prices are $125 higher. In other words, it’s taking less downward price mo   More...