Gold's Dueling Parabolas

The fractal long range forecast for gold is basically a parabola. A long while back, before gold was anywhere near $1000, David Nichols of the Fractal Gold Report drew this result of his fractal analysis for gold's future:

I recently added the note about the resistance level we have since broken through that is smack dab centered on the parabola drawn by the fractal technicians clear back when gold was at $734.50! This analysis is from pure fractal geometry and physics, which know nothing of idiots in Washington or fools on Wall Street. But they have their parabola too!

click to enlarge

I suppose a lot of the debt increase of the 80s can be blamed on Reagan's cold war deficits. But the U.S. won the cold war, and in peace-time, debt could have come back to sensible levels, as the Reform Party of Ross Perot tried to accomplish in the early 90s. But instead, a new war developed, and off we went on another parabola. We were invaded by an army of congressional spendthrifts, credit card carriers, and wiz kids on Wall Street creating and slicing and dicing mortgage debt, and peddling and juggling these deadly missiles to no end. This cold war has, unfortunately, turned unto a shooting war with the first missiles launched in 2008. The debt traitors started their parabola in the early 90s. Gold started its parabola 10 years later in retaliation. Call me crazy, but I think these dueling parabolas could be related.

Disclosures: Long a gob of gold

Comments

[Jolly_Rancher:]

Whenever a commodity or equity goes "fractal" or parabolic, it is time to sell.

Nov 16 09:50 AM

[Mad Hedge F...:]

chu Paul Tudor Jones nicely summed up the fundamental argument in favor of gold. The yellow metal is accumulated, and not consumed, and is the ultimate store of value. Gold does particularly well during times of excessive monetization, inflation, and instability of the banking system, as we are seeing now. Central banks, which have been consistent sellers for the last 20 years, are about to flip to net buyers. If non G7 central banks, like China, want to increase their gold holdings from the current 20% of reserves to the 35% weighting now owned by the G7, it will require 1.3 billion ounces of new purchases, or 20% of the total world supply. Certainly they are getting fed up with their ever depreciating dollar holdings. Witness last week’s Bank of India purchase of 200 metric tonnes. ETF’s now own $50 billion worth of the barbaric relic, about 3% of the world total, making them the sixth largest holder in the world, and retail demand for these gold proxies is expected to explode in coming years. Private investors, mutual funds, and pension funds are all underweight gold. This is all happening in the face of declining production from traditional gold suppliers like South Africa. It all adds up to a whole lot of new gold buyers and a shrinking body of sellers. Paul didn’t give any specific price targets other than “up.” Long time readers of this letter know I have been banging the table about gold all year. Time to salt away more American eagles for those college funds and grandkids.

Nov 16 11:54 AM

[silverslut:]

The FRN, or counterfeit dollar, is still loosing value, even when measured against other fiat currencies that are themselves depreciating. The only real money that stores value in this modern world are the PM's. The Gold market is tiny compared to the size of modern currency flows. The Silver market is 100th the size of Gold. The trend for 9 years running is to turn to real money. Meanwhile, unbacked currencies are just starting to be recognized as the risky vehicles that they are. This clearly indicates that the trend into PM's is still in it's early stages. Gold at $10,000 and Silver at $1,000 is already baked into the cake. Meanwhile, our monetary and congressional authorities are working like fools to drive the future prices of PM's even higher. If you really look at the history of PM's and fiat currencies, you will conclude, that your whole portfolio is only safe when in PM. If you want to be considered an investing wizard for the rest of your life, then buy lot's of real silver and stocks.

Nov 17 12:17 AM

[WACG:]

Fractal! HA!! It is ABSOLUTELY IMPOSSIBLE for there to be ANY fractal structure in a financial time series. The most elementary reason (amongst MANY) is that the time series is not infinitely divisible and thus cannot be self-similar as a fractal. I find it amusing how people glom onto "technical terms" in the attempt to give their pseudo-analysis a kind of sophisticated luster to attract the innumerate and barely literate. What is next? A quantum chromodynamic analysis of the price of wheat? Past prices cannot and never will predict anything about the future price movements of anything.

Nov 17 08:41 AM

[HBWOW:]

Is there a huge conspiracy of wall street manipulators, socialists in government, and corporate insiders who have and are bringing about
the fall of democracy to become the resulting elite rich and powerful herding the mass public into financial ruin and big brother control?

Nov 17 10:56 AM