I am going to make several very LARGE statements that will probably attract all sorts of bashers, naysayers and skeptics. Before doing so I want to review where I believe things stand currently. We know that the world has now set up a “competitive” bank and clearing system to the dollar, the IMF and the World Bank. We also know that China has been buying almost all of the world’s gold production for the last several years. This has occurred in the face of the price of gold dropping 35% (silver more than 60%) over the last 2+ years. Inflation that is “officially” reported at under 2% is actually running between 5-10% while our stock markets are at or close to all time highs and U.S. “funded” (admitted) debt is now over 100% of GDP. My point is this, we are in really poor (dire) financial shape, we are not being told the real story and something, somewhere, is about to snap.
Here goes … I believe that we are on the cusp of the precious metals making an historic moonshot in terms of dollars. I believe that over the next 3-5 years, gold and silver will make moves both in dollars and percentage terms as big or bigger than what they did back in 1978-1980. I also believe that the shares will not only participate but will be the biggest movers of all. In terms of dollars, I believe it is possible that gold reaches a range between $10,000-$30,000 and silver well above $200 per ounce over the next several years! I will also say that if these numbers turn out to be wrong, they will most likely be far too low and conservative in nature. I also believe that this move will begin shortly (the next 2-3 months?) and maybe even come out of nowhere. The move could be kicked off with fundamental news such as Saudi Arabia accepting “non” dollars for oil, it could occur based on some sort of financial news or because of war. The move could begin prior to any news release or after, there is no way to tell and it really doesn’t and won’t matter one way or the other.
OK, so how can I make such grand statements? Over the last few years I have documented the “fundamental” case for you. Demand has dwarfed supply. The amount of debt, money supplies, and derivatives outstanding have exploded against a gold “flow” (new supply) that isn’t even growing at 2% per year. From a fundamental standpoint, you must also question whether the U.S. (or anyone else for that matter) really has the gold that they say they do. Gold in far more numerous quantities than have been mined has been moving east to China, Russia, India, et al …it had to have come from somewhere and the most likely place would be “Western vaults”. We know all of this, we/I have talked and written about it until blue in the face and your patience has surely been tested.
So why now? Why (other than fundamental reasons) should gold and silver explode in price? I received the following links from Morris Hubbart this past Friday in which he comments on very long term gold and silver charts that were created by Stewart Thomson of Graceland Updates. They are 5 minutes in length and easy to understand. Please watch them now so you will have a reference to my explanation.
These videos show the charts of both gold and silver that go back to 1971. This is important for several reasons. First, 1971 was the year that gold and the dollar were no longer “pegged” at $35. This peg was broken as you know because the U.S. lost at least 60% of her gold to foreigners who were turning in dollars and demanding gold for them. The “artificial” price of $35 could no longer be defended. Another reason that a very long term chart is important is because over many many years, it can only be “massaged” at best rather than completely “painted”. I and many others have brought to your attention that over the last years, “paper gold” has been sold to retard or suppress the price. In fact, just last Monday and Tuesday had 11 trading minutes where 90+ tons of so called gold were sold. Who would ever sell like this? Who even has this much gold to sell? This was 4% of total global production …in 11 trading minutes? This dumping of contracts surely shows up in the hourly or daily charts, they are not even a blip on the monthly charts. The most important aspect of the monthly charts is that when the MACD’s crossover, it is a good indication where the next 2 to 3+ years are headed.
I am not a technician by any stretch and don’t profess to be able to read Gann, French curves or Elliott waves. In fact, I believe that these practices are left open to far too much interpretation. I do believe however that charts (long term) have validity and can be useful, particularly when the “MACD’s” (moving average convergence divergence) are included. This is how I see these charts. We have had a correction over the past 2+ years that was actually shallow in gold (not so shallow in silver) compared to previous corrections over the past 43 years. This correction has occurred with the MACD relation moving lower than at any point in time over these last 43 years. I take this to mean that “internally” gold is strong and has been accumulated the entire way down. The moving averages are now “touching” and about to cross over to the upside which will create a very major buy signal. This is going to happen sooner or later whether it be this month, next month or even 3 to 4 months from now. Even a sideways movement from here will trigger the buy signal.
I want to explain this a little further so you will have a better understanding. These charts are like “coiled springs” waiting to snap. The MACD’s are turning up from the deepest levels ever while price did not get hit as hard as in previous corrections. For example, gold dropped nearly 50% from 1975 to 1977 before its historic run up to $850. A similar correction today would have seen gold trade under $1,000 but it did not happen. I think that the best way to describe this is that gold is about to jump from a much higher diving board (price) and the diving board has far more “spring” (lower MACD crossover point) to it than any other time since 1971!
With the above said regarding the technical analysis that suggest the “time is very close” and that the move should be very large, let’s go back to the fundamentals because they are what really count. It only makes sense that gold should go far higher in dollar terms from here because gold is “real money” and dollars are “fake money” that is issued by a bankrupt institution. It is for this reason that I said above that my “moonshot” numbers very well may be ridiculously low! The possibility does exist in a worst case scenario (where it is discovered that Ft. Knox is completely empty and the U.S. goes into total financial collapse and default) that gold goes to infinity in dollar terms because dollars go to zero. I am not saying that this will happen, what I am saying is that it is possible.
To wrap this up, the fact that the MACD’s are turning up from such low and coiled levels tells me that the move will be very large and violent to the upside. From a fundamental standpoint, when you do the math of gold price to money supply or to debt, you get numbers higher than I spoke of above. When you couple this with the knowledge that the dollar surely looks about to be dethroned as the world’s reserve currency you have a chicken or the egg problem. Is the dollar about to crater in value or is it that gold is about to explode upward in price? From another angle, do the charts forecast a gold price explosion or does an explosion occur because price has been suppressed (and thus coiled) for so long? If you think about it, these long term charts have “captured” the suppression scheme picture perfectly and are illustrated by the massive “coils” that now exist. The U.S. almost “lost control of the gold price back in 2011, I don’t believe they will be as lucky on this go round as few if any more rabbits can be pulled from Uncle Sam’s tattered hat! Remember, the East is about to open “physical exchanges” where true prices will be discovered late this year. The “discovery process” will in my opinion be shocking and the long term charts are telling us this!