If History Repeats, Gold Will Surge Soon

After the recent turn of events that closed the door on a new high for the price of gold this spring (summer arrives this weekend), attention turns to a very encouraging historical pattern that has developed during the current decade - surges late in the odd-numbered years of 2001, 2003, 2005, and 2007 leading to much higher levels after the snow melts.
Will the 2009-2010 period produce a similar result? We'll find out soon enough.

It's important to remember that it takes time to move past previous highs and the bigger the high, the longer it takes. It was almost a full year before the early-2004 high was surpassed and it took almost 18 months for the early-2006 high of $725 an ounce to be recaptured.

The early-2008 high of just over $1,000 has been tested a few times now, each time being turned back short of that mark. Maybe it was just too soon. A repeat of the 2006-2008 period would see a new all-time high this fall with much higher prices in 2010.

Comments

[Larry House:]

That is a big "if." I am more concerned with holding precious metals than trying to time a move. I really don't see gold as a trading vehicle, but that is just me.

Jun 19 04:31 PM

[Donald Ingram:]

Right Larry, gold is more of a convertible insurance policy for me, besides I like owning REAL money. Tim, I think your odd year approach is a reach, however I agree that gold will go higher - much higher. As to when? Jim Sinclair and cohorts seem to think we are very close. Time will tell.

Jun 19 05:51 PM

[AuGod!:]

If it goes up I hold. If it goes down I buy. That is the simple beauty of already having a position.

Jun 19 07:05 PM

[Living4Divi...:]

as Mark Twain said, “History never repeats itself, but it rhymes.”

Jun 19 07:14 PM

[cameroni:]

Credit id still too restrictive and we are not near enough a real estate bottom for the pieces of the puzzle to fall into place for a real inflationary period to be initiated. That impacts the price of Gold.

The stage itself has been set though. To me it is just a matter of when the new liquidity hits the wider economy. That has not happened yet and so we are still deflating. But the future is foreshadowed.

I think we can still consider this period as a buying opportunity and if the odd number theory takes there will be some money to be made.

I am betting however that during this current period, if we do have a major market retracement there will be another chance to buy gold at prices considerably lower than they are now.

Jun 19 09:00 PM

[goldrealmny:]

When gold breaks $1000 with authority, it is going a lot higher than just $1200-1300 (which seems to be consensus target of many pundits). The move from $400s to $730 was almost $300. The move from $650 to $1030 was about $380. I am looking for $500-600 upmove in the next leg. The idiotic govt gold cartel manipulator short positions guarantee quite a squeeze up once the momentum starts (JP Morgan are just wh-res for the govt using your tax money to short gold and manage their FAKE etfs that DON'T actually buy the gold they say they do).

For the love of God and all that is sacred get rid of any ETFs you have a buy PHYSICAL METAL. You won't regret it. Screw complaining about the transaction costs - THEY WILL BE MINISCULE in due time....

Jun 20 02:46 AM

[Roger Knights:]

The trigger could be China's buying the IMF's 440-tonne gold offering. That, if it happened, would turn around a long-term trend of central-bank selling and put a floor under the price of gold, because the herd would buy on dips, feeling safe.

Jun 20 05:38 AM

[Old Trader:]

Roger,
Is that a "done deal"? I've heard the possibilty of that happening (China's purchase of IMF gold) in discussions of China shifting reserve assets away from USD. More recently, I've read that China, et al, will be buying IMF bonds, which will take the pressure off of the IMF to sell its gold (the assumption having been the IMF needed funds for the rescue of various Eastern European economies).


On Jun 20 05:38 AM Roger Knights wrote:

> The trigger could be China's buying the IMF's 440-tonne gold offering.
> That, if it happened, would turn around a long-term trend of central-bank
> selling and put a floor under the price of gold, because the herd
> would buy on dips, feeling safe.

Jun 20 09:14 AM

[Spartacuss:]

Since gold is a non performing asset, it is clear that it constitutes an insurance policy against vagaries of political whim.

When all the czars get through with tinkering what are we ever left with: ashes.

It never ceases to amaze me that the natural cycle of things are bested by the wizards who know all like Minkiw, the great professor of all things econonmic, oh, and don't forget Krugman. I cannot reconcile why these people eminently educated can consistently fail to understand basic economics which is: provide the best product at the best price to those who need those products desperately. Like Henry Ford for example.

Economics is NOT about money, it is about concepts to bring to market those things which people need or perceive they need. Look at the hola hoop. Who needs one? The pet rock, who needs one? It matters little about whether the need is percieved or real, it still is a need and the market needs to provide it if that is what the people want. When we cross over that mysterious border of economics we find that the tinkerers are busy in their dens figuring out how to manipulate money for the sake of money that is when things start to go wrong. The biggest mistake is shuffling money in order to guide markets for the sake of money. That is why no economist has ever, ever, provided a marketable idea. It never occurs to them that money is a tool to an end and not an end in itself.

You can take a basketful of economists, theorists, technical wonks, and don't forget the ever bountiful politicians who understand neither economics or markets and put these dumb bastards in charge of the great ship of capitalism and what do we get? Onerous taxation and wars.

Why I wonder do we always flounder on the shoals of the perpetual sham of intellectualism cum leadership of all things human where allways and everywhere we get misery as a result.

The reason: wanting something for nothing.

Jun 20 09:29 AM

[optionsgirl:]

Our congress endorsed the gold sale (Senate vote was 6/18). The article written by the IMF is on my instablog. This article addresses many of your questions. They will all be spending $ like drunken sailors.


On Jun 20 09:14 AM Old Trader wrote:

> Roger,
> Is that a "done deal"? I've heard the possibilty of that happening
> (China's purchase of IMF gold) in discussions of China shifting reserve
> assets away from USD. More recently, I've read that China, et al,
> will be buying IMF bonds, which will take the pressure off of the
> IMF to sell its gold (the assumption having been the IMF needed funds
> for the rescue of various Eastern European economies).

Jun 20 10:22 AM

[Old Trader:]

Thanks...btw, you've gained another "follower".


On Jun 20 10:22 AM optionsgirl wrote:

> Our congress endorsed the gold sale (Senate vote was 6/18). The article
> written by the IMF is on my instablog. This article addresses many
> of your questions. They will all be spending $ like drunken sailors.
>

Jun 20 10:35 AM

[Francis Sch...:]

A lot of words for something that has already happen. Have a peek at the chart of gold expressed in Canadian Dollar (there is one on the web site under CanDollar). The 1,000 level was broken months ago...and tested...

People and analysts must stop looking at the US$-Gold chart only. There is a lot more than usDollars in the world. Time to find out as the Reserve currency is loosing its status.

Jun 20 10:50 AM

[Hunter 51955:]

I have the same philosophy.Take a position,overall has it ever been worth less?


On Jun 19 07:05 PM AuGod! wrote:

> If it goes up I hold. If it goes down I buy. That is the simple beauty
> of already having a position.

Jun 20 11:33 AM

[optionsgirl:]

Jim Sinclair expects it to pop. Here's his latest from his blog, Jim Sinclair's Mineset:


Attack Of The Shorts
Posted: Jun 19 2009 By: Jim Sinclair Post Edited: June 19, 2009 at 4:22 pm
Filed under: General Editorial
Dear Friends,
Please understand that yesterday was a concerted effort on the part of the shorts to demoralize you. Demoralization is used to cause a cascade of share offerings, therein allowing the shorts to make cover.
If your situation was the only one that suffered such an attack then maybe worrying would not be out of the question.
I watch RGLD and HUI for a quick and dirty analysis of indiscriminate or specialized action on my corporate priority.
You will see the short barrage was indiscriminate and across the board in all gold issues in which both legal and illegal large shorts live.
We are so close to the point where two of the best resources I have given you feel gold will launch upwards. That such action should not be a surprise, especially with the outstanding past success these gentleman have.
IMF sales are a total joke. When they do occur it will only further bull the market.
Shares whose assets will be impacted by a two to five fold increase in their underlying worth will not decline as a result. The reason for this is if they did they would be taken over in a heartbeat by the majors whose only increase in resources is an accounting product of higher gold prices moving ounces above cut off accounting levels.
The majors are starving for real new ounces in the ground.
Regards,
Jim
ShareThis

Jun 20 12:45 PM

[Dave Wrixon:]

Probably just testing the waters for when the US has to sell its own Gold, along with just about everything else that is not bolted down.


On Jun 20 10:22 AM optionsgirl wrote:

> Our congress endorsed the gold sale (Senate vote was 6/18). The article
> written by the IMF is on my instablog. This article addresses many
> of your questions. They will all be spending $ like drunken sailors.
>

Jun 20 12:54 PM

[INVESTGROUP:]

what if there was something more valueable than gold? what does every young lady like to see? what if you could buy this for just a few cents and you wouldn't even look at the yellow stuff?
read more of $utrm.pk

Jun 20 02:54 PM

[nmelendez:]

For all the gold bugs...yes gold will go up, but not because China is buying. China wants gold as cheap as possible until they accumulate their reserve. That's what JP Morgan and GS are counting on. The Govt is not selling gold...THEY ARE BUYING GOLD!!!! They just won't admit it either because that would really skyrocket gold. US and China are playing both sides of gold, long and short.

Jun 20 04:22 PM

[Old Trader:]

Francis,

I'm as macro as anybody else, but, unfortunately (or not), gold is not quoted in CN$.


On Jun 20 10:50 AM Francis Schutte wrote:

> A lot of words for something that has already happen. Have a peek
> at the chart of gold expressed in Canadian Dollar (there is one on
> the web site under CanDollar). The 1,000 level was broken months
> ago...and tested...
>
> People and analysts must stop looking at the US$-Gold chart only.
> There is a lot more than usDollars in the world. Time to find out
> as the Reserve currency is loosing its status.

Jun 21 03:29 AM

[Joseph Cafa...:]

I enjoyed your article, but I already wrote about this effect in my article "Gold's 2-Year Cycle", published at Mineweb.com in early January of this year.

Your readers might enjoy reading my supporting views at "www.mineweb.com/minewe...".

Incidentally, every prediction made based on this 2-year pattern has been fulfilled to a T during the first 6 months of this year. I, as you, expect the pattern to repeat for the back-half of '09 and well into the middle of '10.

It's nice to know other writers feel the same way I do.

Cheers,
Joseph Cafariello

Jun 21 03:10 PM

[jayminho:]

interesting to be reading this right now..
i have a bunch of indicators here, pointing very bullish to gold stocks..
so now, i also have, fundamental, yours, pointing more bulls to gold.

Jun 21 11:00 PM

[ETF Grind:]

Its hocus-pocus like this that makes fundamental investors laugh at chartists.

The fundamental case for gold is strong. You don't need a astrologist like this dude to tell you that.

Jun 22 12:49 AM

[Steve Soden:]

Gold is not a trading vehicle, it's an insurance policy that will pay-off when paper money goes into a funk around the world.
Governments will adjust currencies after a huge devaluation.
Somewhere in the middle of the coming crisis Gold will rise to stagering heights in price like the Tulip Bulbs did.
No, you can't eat Gold but it has been valuable since mankinds first history and subject to hoarding.
When the public gets involved, hold on to your hats.

Jun 24 05:45 AM