Gold Continues to Mimic the 1970s

Ask and ye shall receive… we promised we would update the comparison chart we last showed in late November in an article that kind of insinuated that it might be a good time to buy gold and gold stocks (see: “Gold and Gold Stocks – It Gets Even More Interesting” for the details). We are hereby delivering on that promise.

 

croesus_av_stater_1A Lydian gold stater from the time of the famously rich King Croesus, approx. 570 BC. It seems they already had this bull/bear thing going at the time…

Photo via ancientmoney.org

 

It is actually interesting to revisit both past articles speculating about a potential gold bottom that turned out to be correct (those would be the many articles we penned on the topic from August 2015 onward) as well as those that turned out to be incorrect (which would e.g. include a number of articles written in late 2014. Although they managed to catch a playable rally in timely fashion, it ultimately turned out to be a bear market rally).

If you do that you will notice how much more careful we got over time – even when we definitely saw good potential for at least a short term move, we always stressed that the turn might still not be at hand. Apart from such psychological considerations, it is of course also well worth comparing the fundamental, technical and sentiment signals we have tracked over time. We believe all of this has educational value that may be helpful in a great many future market scenarios, and not necessarily only in the gold market.

You can either make the effort to search the archive, or wait about a week –  we will on occasion put together a reading list with the links to the most interesting articles and post it sometime in the next week.

Let’s move on to our updated comparison chart though – here it is:

 

Bear market comparison, GoldThe 2011 – 2015 bear market compared to the 1974 – 1976 bear market (stretched by a factor of approx. 2.1x).  The peaks and troughs are aligned and as you can see, since the late 2015 low, the patterns actually continue to mimic each other – click to enlarge.

 

Needless to say, this is actually quite eerie. However, although the fundamental backdrop of the 1970s was obviously different from today’s, there are actually many parallels applicable to the gold market, as our good friends Ronnie Stoeferle and Mark Valek have pointed out in this year’s “In Gold We Trust” report.

Indeed, if one reads mainstream press articles written near the bottom of the 74-76 bear market and compares them to articles written near the  2015 low, it is noteworthy that they are almost without exception making exactly the same arguments! We will try to put together some examples of this as well and post them along with the above mentioned reading list.

 

Conclusion

It will be very interesting to see if these patterns will continue to track each other this closely in the future. If so, then we are in for a wild ride – an extremely volatile rally (interrupted by often scary corrections), that will ultimately end in a veritable mania and produce incredible gains in the long term. Unfortunately, in this case we should also expect that the times will get a lot more “interesting” – in the Chinese curse sense.

 

Charts by: Saint Louis Federal Reserve Research

 

 

 

Emigrate While You Can... Learn More

 


 

 
 

Dear Readers!

You may have noticed that our so-called “semiannual” funding drive, which started sometime in the summer if memory serves, has seamlessly segued into the winter. In fact, the year is almost over! We assure you this is not merely evidence of our chutzpa; rather, it is indicative of the fact that ad income still needs to be supplemented in order to support upkeep of the site. Naturally, the traditional benefits that can be spontaneously triggered by donations to this site remain operative regardless of the season - ranging from a boost to general well-being/happiness (inter alia featuring improved sleep & appetite), children including you in their songs, up to the likely allotment of privileges in the afterlife, etc., etc., but the Christmas season is probably an especially propitious time to cross our palms with silver. A special thank you to all readers who have already chipped in, your generosity is greatly appreciated. Regardless of that, we are honored by everybody's readership and hope we have managed to add a little value to your life.

   

Bitcoin address: 12vB2LeWQNjWh59tyfWw23ySqJ9kTfJifA

   
 

Your comment:

You must be logged in to post a comment.

Most read in the last 20 days:

  • A Surprise Move in Gold
      Traders and Analysts Caught Wrong-Footed Over the past week gold and gold stocks have been on a tear. It is probably fair to say that most market participants were surprised by this development. Although sentiment on gold was not extremely bearish and several observers expected a bounce, to our knowledge no-one expected this:   Gold stocks (HUI Index) and gold, daily. As noted in the annotation above, a Wells Fargo gold analyst turned bearish at the worst possible moment...
  • May Away
      May Gone in June... Yes, now that June is here, it is indeed the end of May. Theresa May, to be precise, the henceforth former British Prime Minister. After delivering her unparalleled masterclass in “how to completely botch Brexit”, British cartoonists are giving her a well-deserved send-off, which we are documenting below. But first, in case you don't know anything about Ms. May's heroic “Brexit”-related efforts, here is an explanation of how she tried to finagle the best...
  • Elizabeth Warren’s Plan to Bamboozle American Voters
      A Plan for Everything! The run-up to the presidential primaries offers a funhouse reflection of American life.  Presidential hopefuls, hacks, and has-beens turn to focus groups to discover what they think the American electorate wants. Then they distill it down to hollow bumper stickers. After that, they pump their fists and reflect it back with mindless repetition.   A plea for clemency from Mr. 1/1024th crow. [PT]   Change We Can Believe In.  Feel the...
  • Fed Chair Powell’s Plan to Pickle the Economy
      A Loose Relationship The Dow Jones Industrial Average made another concerted run at the elusive 27,000 milestone over the last several weeks.  But, as of this writing, the index has stalled out short of this psychosomatic barrier.  By our estimation, this is for the best.   Since early 2018 the DJIA has gone nowhere, albeit in interesting ways... [PT]   While not always apparent, the stock market generally maintains a loose connection to the underlying...
  • Paul Tudor Jones Likes Gold
      Gold is Paul Tudor Jones' Favorite Trade Over the Coming 12-24 Months In a recent Bloomberg interview, legendary trader and hedge fund manager Paul Tudor Jones was asked what areas of the markets currently offer the best opportunities in his opinion. His reply: “As a macro trader I think the best trade is going to be gold”. The relevant excerpt from the interview can be viewed below (in case the embedded video doesn't work for you, here is a link to the video on...
  • The Italian Job - Precious Metals Supply and Demand
      Lira Comeback? The price of gold jumped 35 bucks last week, and that of silver 48 cents. The dollar is now down to 23 milligrams of gold. Keith is on the road this week, so we will just comment on one thing. If Italy is serious about moving back to the lira, that will make the euro less sound (to say nothing of the lira). That will drive people mostly to the dollar, but also to gold.   Italian deputy prime minister Matteo Salvini (as the leader of the Lega party he is...
  • Bitcoin: What is the Best Day of the Week to Buy?
      Shifting Patterns In the last issue of Seasonal Insights I have discussed Bitcoin’s seasonal pattern in the course of a year. In this issue I will show an analysis of the returns of bitcoin on individual days of the week.   Bitcoin, daily – since bottoming in early December, BTC has advanced quite a bit. It remains an excellent trading sardine. [PT]   It seems to me that Bitcoin is particularly interesting for this type of study: it exhibits spectacular price...
  • Feeling the Heat of a Civilization on the Downside
      An Epic Folly for the Ages Today we begin with a list.  A partial list.  And in no particular order... Angela Merkel. Donald Tusk. Mario Draghi. Donald Trump. Jerome Powell.  Shinzo Abe.  Haruhiko Kuroda.  Theresa May. Boris Johnson. Mark Carney. Xi Jinping.  Emmanuel Macron.  Vladimir Putin. Justin Trudeau. Juan Trump.  And many, many more...   Politicians and bureaucrats of the modern age of statism and central planning... fighting a rearguard action...
  • Silver Remains a Monetary Metal - Precious Metals Supply and Demand
      Silver Price Driven by Reservation Demand The price of gold went up a buck last week, but the price of silver dropped back 13 cents. And the gold-silver ratio marches further upwards. Keith spoke at a conference this week, about how to analyze the fundamentals of supply and demand in gold and silver. He talked about the basis of course.   Silver coins – silver prices are partly influenced by an industrial demand component, but the fact that they move most of the time with...
  • “We’re All Socialists Now”
      An Ominous Sign of Things to Come Despite being probably robbed of the Democratic Party’s nomination by the Clinton political machine, the success of the Bernie Sanders’ 2016 campaign with his advocacy of “democratic socialism” was an ominous sign of things to come and, in some sense, more telling of the political climate than Donald Trump’s improbable victory in November, 2016.   Bernie Sanders, yet another professional finger-wagger (he is actually famous for his...
  • How Do Stock Prices React to Rate Cuts by the Fed?
      The “Greatest Economy in History” Stumbles “This is the greatest economy in the history of our country”, Donald Trump opined just a few months ago. Alas, recently there is growing evidence of an economic slowdown.   The Morgan Stanley MSBCI business conditions gauge plummets to its lowest level since 2008, as recent economic data releases ominously persist in disappointing. [PT]   This has fueled speculation of imminent rate cuts by the Fed. You may...

Support Acting Man

Austrian Theory and Investment

j9TJzzN

The Review Insider

Archive

Dog Blow

THE GOLD CARTEL: Government Intervention on Gold, the Mega Bubble in Paper and What This Means for Your Future

Realtime Charts

 

Gold in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Gold in EUR:

[Most Recent Quotes from www.kitco.com]

 


 

Silver in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Platinum in USD:

[Most Recent Quotes from www.kitco.com]

 


 

USD - Index:

[Most Recent USD from www.kitco.com]

 

Mish Talk

 
Buy Silver Now!
 
Buy Gold Now!