Tuesday, January 5, 2010

Gold's Time To Sparkle Has Just Begun!

The fireworks, which I believe will prove to be life-changing, have just started.  Gold, Silver, Platinum, Palladium and virtually every commodity appears poised to launch into their final maniacal phase.

If you haven't yet invested in one of these areas, I highly recommend you do so IMMEDIATELY.

Let's review a few key indicators. 

One is the Dow/Gold Ratio (DGR), which currently stands at 9.45 (10,583/1,120).  In prior manias, the DGR has approached between 1 and 2.5.  If this mania follows the script, an ultimate peak for Gold would be between $4,233 and $10,583!  This, of course, requires that the Dow remain unchanged.

Next, we can "inflation-adjust" Gold relative to its prior peak of $850 reached in 1980.  If we use the excellently revised inflation statistics computed by ShadowStats (http://www.shadowstats.com/), we arrive at a projection for Gold of approximately $7,500!

We can also revisit the HUI/Gold ratio (HGR).  This ratio closed yesterday at 0.4 (447.81/1,120).  The HGR typically varies between 0.4 and 0.6.  Applied today, this would suggest a Gold price of about $1,850 immediately!

We can also apply the Silver/Gold Ratio (SGR).  Yesterday, the SGR closed at 63.76, while as recently as November, 2008, it reached about 85.  It has been as low as 17 during the last mania in Gold and Silver in 1980 ($850/$50).  Applied today, that ratio would suggest a price of Silver at $65 IMMEDIATELY.  And given my guesstimate of Gold's ultimate target of $5,000, Silver might reach $300!

Neither Gold nor Silver has reached anything approaching these targets ...  yet.   But, the case that both Gold and Silver are heading much, much higher is COMPELLING!

Tomorrow, we'll "yield" some clues as to what might become of interest rates.

Thanks for reading!

Marko's Take

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