Gold Forecast: On Gold Explosion And Reset 2019 - 2021

Friday, July 5, 2019

fine gold

All Factors for Gold Price Explosion

As this nation celebrates its birth, we must be reminded of the Invisible Hand that guides not only this nation but also the world.  While there may be conflicting signals on the trends of the tangible assets represented by gold versus the intangible assets represented  by the stock market Dow index, we stand by our analytical results published here.

We firmly believe that the gold price explosion has started and there is limited potential for Dow and the global stock markets.   In this article, we review our analyses and update our forecasts.

Big Picture: Tangible versus Intangible

Despite all the commotion in global events, the following chart summarizes the big picture of generational cycles.

Chart 1 – Gold vs. Dow (1900 – Present)

Note the generational lines of 20 years marked by blue lines shown in the above chart.  Gold and Dow alternate in cycles of 20.  These two indices had done through turmoil and peace time like recent years. 

Gold Price Reset Coming

Chart 2 – Gold Price Reset & Monetary Base

  • The gold legendary expert Jim Sinclair first proposed a gold price reset to deal with the financial crisis of 2008.  Subsequently there are other fine precious metal analysts pointed out the unfettered monetary printing (QE’s) will lead to a gold price reset to rein in rule based economy.
  • Clearly the central banks in major countries including China are increasing their monetary reserve in purchasing gold.  This will soon trigger retail investors in purchasing gold, very much similar to the situation in 1970 – 1980.

Updating Near Term Forecasts

In the following 3 charts, we updated our forecasts on gold and Dow.

Chart 3 – Comparing 1975 & 2012 Gold Peaks

  • Based on the comparison shown in the above chart, we forecast that gold price will reach $2500/oz by earlier 2020.

Chart 4 – The Rise and Falls of Gold and Stock Markets

  • On the left of the chart, we compared the ratio:

$BPGDM = the percent bullishness of gold miners

$BPNYA = the percent bullishness of NY exchange participants

The ratio tends to increase with time since gold price bottom in 2016.

  • The right chart above confirmed the limited potential of Dow’s advance.  We forecast that Dow will soon drop to $20,000 by 2020.

Chart 5– Updating Gold Forecast by Golden Line Method

Based on the above chart, we believe all current small movements in gold price and its volatility are to be ignored, as compared to the big picture discovered in the first sections.

Summary

As small investors in the turbulent world full of surprises, we need to prepare our financial portfolio wisely.  In particular, the intangible Dow index will not increase forever. Neither will other assets.

We are not certified or qualified financial advisors.  Please consult your certified financial advisors for actual trading and investing.

“Has not my hand made all these things, and so they came into being?”

declares the Lord.   Isaiah 66:2

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F.T. Dao is a private investor and recently left the corporate world for technical analysis of stock markets.  He holds a PhD degree in physics and has done technical analysis of the market on the side for many years.  He welcomes constructive discussion and can be reached at:  ftdao245@gmail.com  ,ftdao245@comcast.net