There is one technical analyst we have been following for some time, Avi Gilbert, who is an Elliot Wave analyst. To be honest we are a little sceptical of technical analysis when we are in such a manipulated market with such unprecedented economic influences as the world faces now. However within that same setting (post GFC) Mr Gilbert quite accurately called the top in 2011 when everyone was calling $2000+ gold and then the bottom in December 2015 when everyone was calling sub $1000 gold.
In June 2015 he had this to say:
“I am seeing this correction finally completing (but at much lower levels) and starting a major bull market phase that can last the next 50 years.
So, while many that have read my analysis over the last three years have viewed me as being the staunchest of bears in the metals world, I will be switching sides and moving strongly into the bull camp, especially after we see the next and final decline which will likely take place over the next half a year.
In fact, if you look at the Gold Bugs Index HUI, chart linked at the bottom of this column, you will see that our projections are calling for an almost tenfold increase in this index over the next decade or so, which will likely increase to a fifty-fold increase in the index over the next 20 or so years, and well beyond that in 50 years. Ultimately, we see the HUI over 15,000.
Yes, I know that this is quite a bold prediction. However, please remember that, for me, it is all a matter of mathematics and nothing more.”
Finally on the current price (from yesterday):
“And, as it relates to gold, this same mathematically based price projection (which is based upon the same methodology that identified the top in 2011 and the recent bottom) suggests that gold can conservatively reach the $25,000 mark.”
“This past week, we have seen the metals continue their consolidation. There is nothing I have seen in the price structure over the prior month that is suggestive of a bearish pattern in the metals complex, so I will maintain my larger degree bullish perspective…”
$25,000 seems fanciful but such macro calls often do. The founder of the Elliot Wave analysis, Ralph Nelson Elliott made such a ‘fanciful’ call in 1941 amid WW2 raging around him and sentiment at historic lows. He said:
" should mark the final correction of the 13 year pattern of defeatism. This termination will also mark the beginning of a new Supercylce wave, comparable in many respects with the long [advance] from 1857 to 1929. Supercycle is not expected to culminate until about 2012."
He called the 70 year secular bull market that did indeed rage from that time on. So here we are in 2016 just 4 years after that ‘about 2012’ call (a reasonable margin of error in the context of 70 years), just 7 years after a major ‘correction’ (pre-cursor?) in 2008/9 and potentially on the precipice.