Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Price Is Now On Its Way To All-Time Highs

Commodities / Gold and Silver 2016 Aug 02, 2016 - 12:17 PM GMT

By: Hubert_Moolman

Commodities

I have compared the performance of the current gold bull market (since 2001) with the 70s one. Below is that comparison (chart from barchart.com):


During the 70s bull market, gold went from $35 to $195 in the first phase. That was a 458% increase. The first phase of the current bull market took gold from $252 to $1920, which made for a 661% increase.

At first glance, it would appear that the current bull market outperformed the 70s one. However, it only took about five years (1970 to 1975) to get the 458% increase, compared to the roughly ten years and five months it took to get the 661% increase. If the performance of the current bull market actually matched that of the 70s, then prices should have risen about 1000%.

The decline from the peak of the first phase of the 70s, took gold from $195.5 to $102.2, a 47.7% drop. The decline from the peak of the first phase of the current bull market, took gold from $1920 to $1041, a 45.8% drop.

The declines are almost similar in extent (47.7% vs 45.8%), however; the decline in the 70s only took about one year and nine months, whereas the decline since 2011, took about four years and three months.

The 70s decline lasted about 35%(1yr 9months/5yrs) of the period of the rise, whereas the decline since 2011 lasted about 40.8% (4yrs 3months/10yrs 5 months) of the period of the rise. This shows that the declines are almost similar relative to the period of the rise in prices.

So, given the above, it appears that the current bull market’s upleg has actually lagged the upleg of the 70s bull market on a relative basis, whereas the declines have almost been similar.

To find reasons for the lag of the current bull market’s upleg, we can look at how the conditions compare, between the two bull markets. Interest rates and stock market movements, for example, provide a good understanding for economic conditions that affect gold prices.

Below, is a comparison of gold prices and the Dow during the first phase of the 70s gold bull market (from tradingview.com):

The net movement of the Dow during the whole first upleg of gold (70s) was down. That contributed positively towards conditions for gold (refer to my articles on the relationship between silver and the Dow).

Below, is a comparison of gold prices and the Dow during the first phase of the current bull market:

The net movement of the Dow during the whole first upleg of gold (current) was up. That contributed negatively towards conditions for gold.

Note that there was a significant Dow crash during both initial uplegs. However, the timing was different. The timing of the 70s Dow crash was more beneficial for gold prices, especially since stock prices were falling all the way from around the middle to the end of the gold rally.

On the other hand, during the current period, stock prices were rising together with gold prices, all the way during the last third of the gold rally.

Below, is a long-term chart (from macrotrends.net) of interest rates (10-year treasury):

On the chart, I have indicated the net movement for interest rates during the first phase of both gold bull markets. The net interest rate movement during the first phase of the 70s gold bull market was only slightly down (almost flat). This contributed negatively (only slightly) towards conditions for gold (for the reasons why lower interest rates are negative for gold).

The net interest rate movement during the first phase of the current gold bull market was down significantly. This contributed very negatively towards conditions for gold.

With interest rates at all-time lows and the Dow at all-time highs things can potentially work out very well for gold prices, provided that the Dow is actually topping, and interest rates are actually putting in a bottom.

The long-term gold chart suggests that it could certainly be so:

I have marked two fractals (patterns) 1 to 4. The first one is the 70s bull market, and the second one is the current bull market. We are currently just after point 3, and gold is on its way to point 4, which will be significantly higher than the 2011 high.

For more on this and this kind of fractal analysis, you are welcome to subscribe to my premium service. I have also recently completed a Silver Fractal Analysis Report as well as a Gold Fractal Analysis Report

Warm regards

Hubert

“And it shall come to pass, that whosoever shall call on the name of the Lord shall be saved”

http://hubertmoolman.wordpress.com/

You can email any comments to hubert@hgmandassociates.co.za

© 2016 Copyright Hubert Moolman - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in