Gold in relation to S&P 500 and the other indexes. Secular BullMy research has led me to many places. One of them, has led me to follow the path that gold follows. In this quest for knowledge, I have met many individuals if which one of them has been of great help. Quant (TR), I thank you for everything, without your guidance it would have taken longer. Never said too much, but just enough to peak my curiosity. Now I understand the famous quote by BaronNathan Rothchild.
That said, I present to you a series of charts that will illustrate my findings. I have strong evidence to support these claims, but I will only use charts. The rest I will leave to you to find.
We tend to think we are in bull markets because the indexes rise. We also think we are in a bear market because the same indexes decline. It is the business cycle the one we refer to. There are many other cycles too.
However, we are not truly in a bull or bear most of the time. We have been moving sideways since 2000, at the peak of the previous secular bull market which started in 1983 during the Reagan years. Yes, we went up and down, even had a financial crisis, but we never went above previous peaks, specifically, the SPX year 2000 peak. It was only until 2013 that we punctured our previous year 2000 SPX high that we started a new secular Bull Market. It is 2016 and we approach what appears to be a collapse of epic proportions in the indexes and new highs in gold never before achieved fuelled by fear . Gold 3000 some claim... I do believe that fear and uncertainty that drive gold's price up. Gold want to be cheap, after all, you cannot buy anything at the store with it and only serves as risk aversion instrument or an investment in these times of low yields (NIRP, ZIRP).
That said, this chart is simple. I marked with the Fibonacci Time zones two points the rest mark themselves. It is curious how we humans behave, indeed. 0 line represents a time shortly after the Nixon shock and when gold reach the first peak at almost 708 USD. I proceeded to mark line 1 precisely when gold started to change trend just before the start of a the new Secular Index Bull Market. Notice how every line marks an important phase in the indexes and how line 8 marks
the start of gold's new bull but short lived bull market just as the indexes started a new secular bear market. Line 13 I do not put much attention, but you can see more or less where it is...now compare it to SPX.
I am convinced that this coming month will be the end of the rise in gold. It will reach a target of $1526 as per my estimations.
"The price pattern reminds you that every movement of importance is but a repetition of similar price movements, that just as soon as you can familiarize yourself with the actions of the past, you will be able to anticipate and act correctly and profitably upon forthcoming events" - Jesse Lauriston Livermore.
"I never buy at the bottom, and I always sell too soon" - Baron Nathan Rothchild
"If a I am right, then I will profit. If I am wrong, then I will profit too because I have this crazy idea that keeping an open mind is very important, to me, and my wallet" - Hector Garcia
