Time Schedule For The Next Gold Rally

If a 100% gold standard would be introduced these days, the price of gold should be at least $50,000 for a troy ounce to cover every dollar in the system worldwide. If a so-called ‘light version’ of a gold standard should be implemented for a new monetary system, like in the agreement of Bretton Woods with a coverage of 40%, a gold price of about $25,000 would be realistic.

Another point of view

When you calculate the peak gold price from 1980 of $850 and adjust it to official inflation, you get a gold price of about $2,500 for a troy ounce. That’s the low-end as a new prediction.

To come up with a more realistic price of gold, we need to focus not only on numbers and targets. We also should take the aspect of the ‘time cycle’ into account for the gold rally. The graph below explains:

(Click on image to enlarge)

At first glance this graph looks somewhat messy, for that reason, we’ll explain to get the picture clear.

First of all, notice how the price of gold picks about every seven to eight years an intervening bottom. These are marked with red circles on the graph.

From these bottoms, a cycle of about 11 years kicks in which end on the exact peak-moments.

• 1969 – 1980
• 1976 – 1987
• 1985 – 1996
• 1993 – 2004
• 2000 – 2011
• 2009 – 2020 (?)

Ok, we have to admit, not every cycle comes up with a huge rise. Especially the long-lasting bear markets brought the gold price weaker tops.

But the cycle where we’re in now is in a secular uptrend which gives the gold price a gigantic potential!

The most recent bottom behind us is low from the late 2008 / early 2009. If the cycles behave like it always did, and we do not even question this, the next top of the gold rally will be set in the year 2020.

This could be the moment for the Dow-Gold ratio to fall back to times 5 or even lower!

No matter what statistics you use, those who have physical gold in their portfolios these days will see its value increase significantly with a factor of at least two, but a factor of 10 should be realistic as well.

What about gold mining shares?   

For those who have faith in this scenario should take a look at the gold mining sector too.

This segment is for a lot of investors pretty risky. If you’re not able to handle high volatility, just stuck with the physical. But if you have the guts to take a wild ride, then take a look at the next graph:

(Click on image to enlarge)

This less complex graph shows the performance of the HUI-index of the last ten years, a very reliable reference of this sector. You can also our warning about the volatility.

At this moment, we see a very interesting technical pattern forming on this graph. An inverse shoulder-head-shoulder pattern should be cleared on the right. This is a very bullish sign which perfectly corresponds with our previously outlined theory.

To be more concrete, when this formation has been completed, which could take up some more months, the path is ready to continue to 600 points and even higher. Consider that today the HUI-index moves around the 200 points!

And never forget: if this sector is on fire, nothing will keep it from stopping. We saw this already happen in the 2008 to 2011 period when the HUI-index jumped from 175 to 625 points (+257%).

Gold and silver mining shares went through the roof, but the JUNIOR shares in this sector went through the sky. Some of them jumped with multiple thousand percents’s!

We strongly suspect that we’re on the eve of a similar lucrative situation these days for the JUNIOR sector. Don’t miss this once in a lifetime opportunity.