Submitted by Morris Hubbartt:

Many market pundits seem to have forgotten how strongly QE can affect the price of gold. This gold chart highlights those effects, with a broad green “chart brush”.   Note the thick green bars.  They highlight the gold price action during QE1 & QE2.  I believe QE3 (and possibly QE4) will produce very similar results.  When the Fed purchases bonds in the open market with printed money, gold tends to rally for a significant period of time.
Quantitative easing is positive for gold, and the effects on silver are even more powerful.  This chart highlights the enormous gains that silver achieved during both QE1 and QE2.   My focus is physical silver, because of concerns about the banking system and growing volatility.
My short term target is $44, which should be acquired at about the time that gold reaches $1850.  To put that in perspective, I expect silver to gain about 29%, while gold gains 7%.  That’s an outperformance ratio of about 4 to 1!

 

 

 

US Dollar Pillars Of Blood Chart

 

  •  At the end of each month I study the closing price for the US dollar, using my “Pillars of Blood” chart.  The dollar is flirting with breaking down from the 80.50 area.  I consider that price to be a significant line in the sand, particularly at month’s end.

 

  •  Where the dollar closes at the end of each month is vital to projecting the next major move.  A November month-end close below 80.50, would suggest that the dollar’s rate of decline could dramatically accelerate.

 

  •  The MACD indicator is very weak, and suggests more downside price action is coming.

 

  • The best alternative to the dollar is gold!

 

Gold QE Power Bars Chart

 

  •  Many market pundits seem to have forgotten how strongly QE can affect the price of gold. This gold chart highlights those effects, with a broad green “chart brush”.

 

  •  Note the thick green bars.  They highlight the gold price action during QE1 & QE2.  I believe QE3 (and possibly QE4) will produce very similar results.  When the Fed purchases bonds in the open market with printed money, gold tends to rally for a significant period of time.
  •  Please note the action of the RSI oscillator.  When RSI moves towards 50, while QE is being implemented, it’s been a very good time to buy gold.

 

  •  The MACD indicator is particularly interesting, at this point in time.  A head & shoulders bottom pattern has formed, with very bullish implications.

 

  •  Gold seems set to perform more like it did during QE1.  My “QE3 targets” are $1850 and $2015.

 

HUI Super Cycle Chart

 

  • This key chart highlights the cyclical uptrends that have occurred in gold about every 3 ½ years. In May of this year, a fresh cycle seems to have started, which is good news for gold stock investors.

 

  • When major bottoms are formed, sentiment is usually extremely negative, and smart money is seen buying in size.  Mark Hulbert’s statistics showed that most gold analysts were very bearish during the formation of the May-July lows.  At the same time, COT reports showed that commercial traders were aggressive buyers.   As the bull move accelerates, I expect volatility to grow, too.  Traders should expect bigger price swings, and set higher profit-booking targets!

 

GDX Monster H&S Bottom Chart

 

  • One of the most dependable formations in technical analysis is the head & shoulders pattern.  Mathematically, this one indicates that GDX should rise to $72.

 

  • These large H&S formations tend to occur at the beginning of major trends, and the highest price reached can be quite a bit higher than the mathematical target.

 

  • To be successful in this market, I suggest trading a portion of your portfolio, while holding a large core position.  This strategy can lower your position cost, while keep you fully exposed to upside reward.

 

GDXJ Monster H&S Bottom Chart

 

  • The most painful market in the gold sector without a doubt has been the gold juniors.  It offers the highest potential gain, and the most risk.

 

  • The GDXJ chart has a large inverse head and shoulders formation in play.  The original double bottom pattern is now part of a huge head.  Note the action of the RSI oscillator at the low points of the left shoulder, and the head.

 

  • Strong rallies occurred in both instances.  I am projecting that a big rally occurs this time, too.  It should carry GDXJ well above the neckline of the H&S pattern, triggering a lot of buying from momentum players.

 

  • My target for this move is $37.  That’s a significant gain from current price levels.  Hold your positions, because as the precious metals rally accelerates, junior gold stocks should play the leading role!

 

Silver QE Power Bars Chart

 

  •  Quantitative easing is positive for gold, and the effects on silver are even more powerful.  This chart highlights the enormous gains that silver achieved during both QE1 and QE2.

 

  •  My focus is physical silver, because of concerns about the banking system and growing volatility.

 

  •  My short term target is $44, which should be acquired at about the time that gold reaches $1850.  To put that in perspective, I expect silver to gain about 29%, while gold gains 7%.  That’s an outperformance ratio of about 4 to 1!

 

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    • Exactly! Operation Twist was only temporary and the bonds will expire soon… again. The Federal Reserve has admitted itself that QE infinity is true by publicly announcing that it will continue to do QEs until the economy recovers but in reality, it won’t.

  1. It’s hard to forecast using a chart when rules are not enforced.  This allows the large players ability to corner and control the market using naked shorts. 
    Considering silver costs about $30 / ounce just to mine it’s a fantastic deal to buy a 99.9% pure commodity at actual production cost.  Compare that to a commodity like oil, corn or wheat where there’s probably a 2x to 4x markup before its available to the consumer in the form of gasoline or flour.  
     
     

    • Yup as long as the cartel can dump huge amounts of silver and gold paper into the market you might as well throw a dart at a price chart.

    • At least Buddy-Boy here is actually factoring IN the MANIP-MANOP, 
      It’s all right there in the charts. Replete with the Cartel’s effects, all historical.
      In this case, I think the predictions are somewhat adjusted for this.

      The MANIP-MANOP is getting less effective all the time. The charts show this.
      One thing not accounted for, is that the Cartel may get new funding from a
      source that is deeper than the past cash flows. Or does “naked shorting”
      even cost the bank$ anything, until the price rises? Likely NO 

    • If you draw a line from the 2008 low price to the recent 2012 low price which was 27$ per ounce on silver’s chart, you’ll see that silver never went lower than that price from 2008 to 2012. That line represents the amount it cost to mine an ounce of silver. Right now, it does cost 30$ to mine an ounce of silver.
       

  2. @undeRGRound: QE4 will probably be something completely different! If “twist is bond swapping & QE3 (infinity) is buying bad bank morgages @ 100% market value, what could QE4 possibly be? I’m thinking it may be along the lines of something like direct debt monitization or as close to it as they can get!

    • I’ll grant you that, Glare. Folks that forecast (like this schmoe) 
      are all saying the “next big thing” will ignite the Silver Rocket!
      He makes good points, but QE’s are onviously not a trigger for
      commodities taking off. It SHOULD BE, but it has not been. My
      point is that it will take off when the buying public gets spooked 
      enough to start a “run on the PM Markets” but too many of the 
      sheeple still buy into the MSM’s BS Laden newscasts. I see it
      EVERYDAY.  

      QE4 will have slightly greater effect than QE3 currently does.
      They could start 4 and have minimal impact. Then ramping up
      QE3 to higher levels could cause a bank run and a PM’s run.
      Who Knows? This Guy? I doubt it!!! 

    • While he is busy playing that ridiculous game, Asians with beaucoup bucks are cleaning out the Western vaults of every ounce of PMs that they can… and at bargain prices, too.

    • Prolly right on, Glare… but his attempts get more intensive and less effective all the time! 
      Once we get past Critical Mass, Silver and Gold will take off like a ROCKETsRedGlare  LOLz! 

  3. Are we already talking about QE4? QE3 just happened recently on September 2012 which was three months ago. Well, QEs will continue to happen to infinity because the Federal Reserve has admitted publicly that they’ll continue to do QEs until the economy recovers but it won’t.
     

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