Was up at 3:00 AM again. 10 month old with teething issues and some sort of sleep regression. Fun stuff.
I’m a student of history. No, I’m not a historian, but history fascinates me. When I saw Mike Maloney’s Hidden Secrets of Money, I wondered why in my 10 years of college none of this was mentioned. I believe, full tin-foil hat, that the educational system intentionally wants newer and newer minds to know less and less about gold and money.
In three separate grad schools for my MBA (I moved, didn’t fail out, folks lol) all of them taught a good deal about Keynesian economics. At the time, though, it was taught to be more of an emergency valve – to be used in times of absolute chaos. It was employed in the Great Depression. However, what all of my schools then skipped over was the fact that in 1942 (or was it 1945 after the war??)-1951, yield curve control was implemented to pay for the war, and perhaps debts from the Great Depression. In this system, you inflated your way out of debt.
All very interesting – and you learn from all of the YT videos that while history may not repeat – it sure does rhyme.
And with this – I’m going to look back at two massive run ups in gold to see if we can perhaps track a bottom for now, and perhaps then see where this ceiling goes?
I’m going to first look at market psychology, then take a look at 1971-1980 and 2000-2011 before digging into 2019 to now.
I love this chart. It shows how a cycle may run – take a peak.
The question you have to always ask yourself – where are we in this cycle? There is evidence of two possibilities, believe it or not. I will dig in to both. We COULD be in the HOPE phase near the beginning. I tend to think this is where we currently are. However, what if we are at the period after euphoria and before complacency? We’ll dig it.
I drew this out to 1983 so you could see the whole thing above referenced below with the sucker’s rally at the end.
What is of particular interest here, is the “hope” phase (1971-1975). I’d like to investigate that for a minute, because I feel mostly this is where we are not in the current cycle.
If you then zoom in to “hope” here, it looks like this….
I noticed a few characteristics here about this run.
- About a 4 year run up to hit the apex in 1975 (4 years in).
- On the 4 year run up, virtually no touching of the 200dma
- 50dma had tradeable waves you could play
- After the apex, the “death cross” happened in Dec 1974, the cross happened 6 months later at end of May.
- It remained under the 200dma for about 18 months, during which the bottom had an approximate .618 fib retracement 15 months in
- Once the bottom was hit at .618, it took 3 months to trade above it’s 200dma
- For the next 3.5 years, it did not trade under its 200dma.
- The second death cross appeared to be the end of that run
- The peak was in by the time the 50dma was definitively crossed down and went to the 200dma
- One last run could be seen to take profits from until the end of complacency.
I’m including up to 2016 here to show the disbelief (AKA “suckers” rally). Looks pretty similar to the one before, huh? I see a flag pattern in there I wanted to look at like in the 1970s. Where was that “hope” area? I’m looking to the most pronounced flagging area that I see from 2008-2009.
Zooming in on this hope area, let me take a look what this looks like with a fib retracement.
Honestly…I don’t see anything of interest except that I see TWO peeks here that have flags I can look at. I have interest in breaking each down.
Section 1 – 2001 to May 2006
This is some tight moving up, very gradual. The “breakout” from this gradual pattern seems to be March 2006 to May 2006, and then you see the .382 retracement for this move. Bounced off of it. Death cross briefly thereafter, but nothing crazy and it went right back to normal soon thereafter.
- Rally went up from 2001 to May 2006 with no real moves below the 200dma (5 years).
- You see a death cross down, and then the 50dma crossed back above 200dma.
- Consolidation period was about 4 months
Section 2 – Rally in bull then continued June 2006 to March 2008
- You can see from the bottom here until the apex, it crossed above the death cross early and had a solid rally for nearly TWO YEARS.
- From this apex until a death cross down for a consolidation was about 5 months in a channel. Then, it went down for about 2 months to hit about a 61.8% retracement on close for the week. Here it is zoomed in.
- Consolidation period here was 7 months.
- From the bottom until 50dma crossed back over 200dma was a good 3-4 month rally into the 200dma.
We then continue on from 2009 to 2011
- What you see from this rally until the peak is again – nothing under the 200dma.
- These have more tradeable waves with moves up and pull backs riding the 50dma almost like an invisible hand.
- It appears the peak was hit, a sharp move down creating the first death cross.
- It then rallied back up into complacency to then have a second death cross.
2019 to present
Now, let’s take a peek at the most recent run
I’m starting my bottom here from August 2019 or so, as the 2016 is part of the “sucker’s rally” from the previous run.
I feel this rally “rhymes” with both the 1970s and the 2000s rally. However, there were 30 years between those runs, and there’s roughly 10 years between the last run and this. So, things might be on a more accelerated timeline?
I can see a two part “hope” setup like we saw in the 2000 run up…
Part 1 – Sept 2019 to March 2020
- Everything above the 200dma until the March crash
- This crash essentially touched the 200dma and moved on.
- Some tradeable waves like the early 1970s rally.
Part 2 of “hope” – March 2020 until now (March 2021)
- Definite flagging pattern
- Retracement of .618 from recent low – happening in both 1975 and 2009.
- Consolidation of 8 months ongoing to hit the .618 1970s was 15 months and 2000s was 5 months.
- Death cross hit 6 months after apex
- In situations above in 1970s and 2000s, once .618 hit, it was about 2-3 months until 50dma went back above 200dma
- Currently 2.5 months past death cross – indicating strong move up to take us back above 50dma in literally any day now from happening.
Where does this go from here?
You have seen the cup and handle projections taking this to about $2900 or so in this next run up – it would suggest that this could take 2-3 years?
Everything about this move seems abbreviated. Truncated. Accelerated. Why wouldn’t the move from “hope” to top be any different?
Move in 1976 to 1980 was 3.5 years from retracement to top.
Move from 2008 to 2011 was 2 years and 10 months from retracement to top.
Maybe this is under 2 years? End of 2022? $2854?
If you look at the data below, one could potentially estimate that the move from this retracement to the top could be about 1.7x. Maybe. Ballpark. If you look at the two previous runs – they were further in moves. Retracements were deeper. Move to the top from the retracement? Sharp in 1980, duller in 2011, and maybe less than spectacular in 2022?
The big problem is we are comparing items in nominal terms. I had heard the all time high in 1980 dollars for gold was 2800. Essentially, we could match that with this rally?
So what does this mean the chart could look like until end of 2022?
What’s interesting about all of this is I also feels this rhymes a lot with the 1970s and inflation. Does this mean we might actually have a pause for 18 months after this rally, and then begin another rally like in 1976? Could THAT move then take gold 8.73x $2,854 to make it $20,000 by end of decade? There does appear to be a path there.
Of most issue, we all saw silver get clobbered recently. The good news is silver has supremely outperformed gold. The bad news is we need gold for this apparently?
I bring this up because I believe at .618 the bottom is in, and this could be a double bottom moment. End of Q. Could be a very interesting day tomorrow and Thursday! If gold reverses, that could then also LEAD the real rates lower – it could correspond with more bond buying Apr 1 along with inflation picking up.
I’d like you to ask yourself, as price hits about $24 on Kitco (David Brady called this EXACT number of $24, by the way several months ago) I want you to ask yourself what person, in this entire country (or world) has actually run to the coin shop to sell at $24? Anyone you think that has the cash to own 1,000 oz bars would be dumb enough to sell at this price? No….all paper games. COT report due Friday and I’m expecting swap dealers to be net long now and the games begin April 1st. Hi ho silver!!!
I’m not a gold analyst, I’m a silver bug. I wanted to try and dig into the gold charts to see if I could tell when the bottom would be in for gold, and it seemed somewhere around .618 at $1675 was the magic number. Who the hell really knows, but if we could look at what rhymes in history, I think we are close to moving up!!!