This Confirms the Gigantic Potential of the Next Gold Price Rally
If a 100% gold standard would be introduced these days, the price of gold should be at least $50,000 for a troy ounce to cover every dollar in the system worldwide. If a so called ‘light version’ of a gold standard should be implemented for a new monetary system, like in the agreement of Bretton Woods with a coverage of 40%, a gold price of about $25,000 would be realistic.
Another point of view
When you calculate the peak gold price from 1980 of $850 and adjust it to official inflation, you get a gold price of about $2,500 for a troy ounce. That’s the low-end as a new prediction.
To come up to a more realistic price of gold, we need to focus not only on numbers and targets. We also should take the aspect of the ‘time cycle’ into account for the gold rally. The graph below explains:
At first glance this graph looks somewhat messy, for that reason we’ll explain to get the picture clear.
First of all, notice how the price of gold picks about every seven to eight years after an intervening bottom. These are marked with red circles on the graph.
From these bottoms, a cycle of about 11 years kicks in which ends on the exact peak moments.
- 1969 – 1980
- 1976 – 1987
- 1985 – 1996
- 1993 – 2004
- 2000 – 2011
- 2009 – 2020 (?)
Ok, we have to admit, not every cycle comes up with a huge rise. Especially the long-lasting bear markets brought the gold price weaker tops.
But the cycle we’re in now, is a secular uptrend which gives the gold price a gigantic potential!
The most recent bottom is the low from the late 2008 / early 2009. If the cycles behave like they always did, and we do not even question this, the next top of the gold rally will be set in the year 2020.
This could be the moment for the Dow-Gold ratio to fall back to times 5 or even much lower!
No matter what statistics you use, those who have physical gold in their portfolios these days will see its value increase significantly with a factor of at least two, but a factor of 10 should be realistic as well.
What about gold mining shares?
For those who have faith in this scenario should take a look at the gold mining sector, too.
This segment is pretty risky for a lot of investors. If you’re not able to handle high volatility, just stick with the physical. But if you have the guts to take a wild ride, than take a look at the next graph:
This less complex graph shows the performance of the HUI-index over the last ten years, a very reliable reference of this sector.
At this moment, we see a very interesting technical pattern forming on this graph. An inverse head-and-shoulder pattern, which should be cleared on the right in the coming months. This is a very bullish sign which perfectly corresponds with our previously outlined theory.
To be more concrete, when this formation completes, the path is cleared to continue to 600 points and even higher. Consider that today, the HUI-index hovers around 200 points!
And never forget: if this sector is on fire, nothing will keep it from stopping. We saw this already in the 2008-to-2011 period, when the HUI-index jumped from 175 to 625 points (+257%).
Gold and silver mining shares went through the roof, but the JUNIOR shares in this sector went completely bonkers. Some of them manifolding! We strongly suspect that we’re at the eve of a similar lucrative situation these days for the JUNIOR sector. Don’t miss this once in a lifetime opportunity.
5 reasons to buy gold mining shares TODAY
- Gold mining shares are in a new bull market since 2016!
- Previous bull markets lasted on average 1,142 days. Today we are only at day 250.
- Previous bull markets increased on average 1,355%. Today we are only up 100%.
- BUT: gold mining shares were never this cheap.
- SO: gold mining shares are on the verge of their biggest increase ever!
Don’t hesitate, buy gold mining shares today
Courtesy: Secular Investor
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