Dow Gold and Gold Silver Ratio Charts Remain Bullish

We continue to favour the Dow Gold Ratio chart as a good indicator as to when the gold bull market might end. It is likely to reach the levels seen in 1980, close to  1:1 or the Dow at 5,000 or 10,000 and gold at between $5,000/oz and $10,000/oz.

This will be an indication that the gold bull market will be in its final innings. Provided of course we do not return to some form of gold standard whereby gold bull markets and bear markets will again become confined to history.

We continue to be more bullish on silver in the long term and believe the gold silver ratio should fall back to the geological 15:1 level as was last seen in 1980. This means that silver continues to be more attractive from a return point of view.

 

From Goldcore:

Today’s AM fix was USD 1,684.50, EUR 1,285.09 and GBP 1,039.69 per ounce.
Yesterday’s AM fix was USD 1,681.50, EUR 1,270.11 and GBP 1,031.22 per ounce.

Silver is trading at $30.92/oz, €23.70/oz and £19.20/oz. Platinum is trading at $1,571.00/oz, palladium at $701.00/oz and rhodium at $1,150/oz.


Cross Currency Table – (Bloomberg)

Gold climbed $11.60 or 0.69% in New York yesterday and closed at $1,684.70/oz. Silver surged to a high of $31.48 and finished with a gain of 1.98%.

Gold edged up today and hit its highest range in two weeks in the prior trading session on the heels of the deal forged that avoided the U.S. fiscal cliff disaster.

The far more substantial risk from the pending budget negotiations remains as does the appalling US national debt and unfunded liability situation – both of which offer long term support to gold and silver.

The market lustily greeted the deal that U.S. Congress passed to raise taxes on the wealthy and spare the middle and lower income earners.

However, the very necessary cutting of budgets in various sectors, military and domestic, will no doubt fuel many more political battles as the nation’s finances continue to deteriorate.

In India, the central bank has required restrictions be placed on gold imports by banks and agencies, while the finance minister said he was evaluating further tax increases on gold imports to help rein in a current account gap that touched an all-time high in the Q3 2012.

U.S. weekly jobless claims for 12/20 are released at 1330 and expected at 365,000 and at 1900 GMT the FOMC Minutes from the fed’s December 12th meeting are released.


Dow/XAU Index – (Bloomberg)

We continue to favour the Dow Gold Ratio chart as a good indicator as to when the gold bull market might end. It is likely to reach the levels seen in 1980, close to  1:1 or the Dow at 5,000 or 10,000 and gold at between $5,000/oz and $10,000/oz.

This will be an indication that the gold bull market will be in its final innings. Provided of course we do not return to some form of gold standard whereby gold bull markets and bear markets will again become confined to history.


Gold Silver Ratio Index– (Bloomberg)

We continue to be more bullish on silver in the long term and believe the gold silver ratio should fall back to the geological 15:1 level as was last seen in 1980. This means that silver continues to be more attractive from a return point of view.



NEWS
Gold holds gains after U.S. budget deal – Reuters

Gold Near Two-Week High as Stimulus Seen Sustained; Silver Gains – Bloomberg

India Considers Higher Gold Taxes – Bloomberg

Chinese magnate gives 100 million pound golden dowry for daughter’s wedding – Yahoo

COMMENTARY

Gold Price Forecast 2013, Buying Opportunity?, is Silver Cheaper? – The Market Oracle

A Swiss Region Where the Gold Comes in Solid and Liquid Forms – The New York Times

Don’t Show Bernanke This Chart Of Gold Loans In India – Zero Hedge

Comments

  1. You have to wonder what sort of ‘butterfly effect’ will cause a much larger reaction that begets a tsunami of effects, thus boosting the price of gold and silver.  It seems that this minor ripple could be something unrelated, such as a muni default that causes and then magnifies a series of derivative defaults that can’t be contained in time,  or an unexpected interest rate increase linked tightly to sovereign notes that causes principal values to drop, thus setting off  increases in collateral requirements that can’t be met.  Or it may  be something simple and directly related to gold and silver, without any outside influence from fiscal issues. Can you spell COMEX collapse?
    IMO everything is related to precious metal prices, which seem to be bellwether indicators of  current worldwide economic conditions. Sadly enough, the worse things get, the better it is for PM prices. 
    We are only 3 days into 2013 and there’ve enough important matters come up, such as the US government’s fiasco with the budget and the need to resolve the debt ceiling (and we will be hearing about that 24/7), that we can be assured a year of excitement that will make 2012 look calm. The Chinese like the phrase, “may you live in interesting times’. Who knows, they may be the instigators of those times as well.

    • The world economy is so intertwined now that an upset anywhere could be the trigger. As you said the derivatives market is the monkey on the back of the entire banking industry and it is waiting to pounce.

  2. 2012 WAS calm, IMO. Pretty narrow price range even for silver.
    Even though I bought the main dips, if you zoom the chart out, it barely looks like dips compared to the price moves pre-2012. 
    2012 seems to have been a “contain it a bit longer” year. A good job was done by those who wanted to buy cheap before the comex defaults. West AND East, it seems. When those 2 agree…
    Only the powers that be will know when silver is to run out. It again SEEMS unlikely to never happen. But which year…?
    It’s almost tunnel vision, but yeah, all we can do it buy more and have strong hands. Don’t sell when the price looks to drop, only switch some to gold.

  3. Dow:Gold ratio is cycling and headed to 1:1.  Whether it’s at 6000 or 10,000 will all depend on how much money and credit the Fed creates.  Silver:Gold ratio is also cycling and headed to 8:1.   Bottom line silver is the better play and has the potential for incredible gains.

  4. Oh, hey … I like that ratio chart! That’s more meaningful from my viewpoint, than these painted index charts  I was saying over on the FB side earlier … at 4billion a day to ‘massage’ all these indexes (hell, commodities are small fry in the larger scheme), the end result of ‘market’ charts can pretty much appear any way the elites want them to look.

  5. Yesterday I looked at the GSR chart of 2011.
    We know silver got smashed like the Hunt brothers, with all this margin hikes. That killed silver, when the GSR stood at 32.5
    HOWEVER gold continued to rise, quite a bit for 4 months. Had silver simply done what silver does, and not interrupted by the margin hikes, you can easily completed the dead straight trend line, and see GSR of 15 by late August 2011. And yes, Gold peaked over $1900 those days. Do the math. It was just a matter of following gold up, with the typical leverage we see in silver.

  6. Gold and silver will never “take off” until there is sufficient fear in the investment world like back in 2008-2009. There are too many control knobs to manipulate the metals globally and too many MSM memes to make the sheeple think everything is OK. A black swan event (a BIG one) is required and, until that event happens, we will be circle jerking each other with charts and news events while we get old and die off.
     
    In the meantime, the knob tweakers just shake their heads and snicker at us while adding up their accounts.
     
    Hate to sound pessimistic but we are the tail trying to wag the dog.

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