Jordan Roy-Byrne: 2018 Likely to Set Off Large Gold Rally
Jordan discusses his latest research where he found some interesting similarities with gold stocks compared to historical three-year bear markets. He found three that compare well; they are the S&P 500 during the great depression, the housing market during the global financial crisis, and Thailand in the mid-1990’s which had a huge bust. He describes how all of the recoveries afterward seem to follow a specific pattern and he sees that behavior in gold stocks. Those patterns ended after 14-24 months with prices moving upwards by 133% to 200%.
Based on this history he thinks the next move leg higher will probably begin sometime in the second or third quarter of next year. What convinced him is the rarity of long-term bear markets, and these recoveries seem to follow very distinct patterns.
Gold in real terms has been pretty weak and lagging even though the dollar has been underperforming. Gold was not able to make a new high even with base metals doing well. This has not been a good year for gold, it’s just been a dollar bear market. Precious metals have been weak relative to other currencies and assets. There is still a lot of relative weakness in the sector, and there is a definite risk of lower prices in the days and weeks ahead. The cryptocurrencies and the stock market may be factors on why gold is being neglected. The Fed hike in December is priced in, and there may be another in March. He feels that investors should start getting ready for the buying opportunities.
Jordan discusses the stock to gold ratio and how it has broken out higher. He thinks this outperformance of the stock market will continue. We are going to have to be patient for a little while longer.
Talking Points From This Week’s Episode
• Gold shows similar patterns to historical 3-year bear markets.
• Gold has underperformed compared to most currencies and other assets.
• Dollar weakness has not affected gold.
• Expects a move up in Q2 or Q3 of 2018
Jordan Roy-Byrne, CMT, MFTA is a Chartered Market Technician and Master of Financial Technical Analysis who is a member of the Market Technicians Association. He is the publisher and editor of TheDailyGold Premium, a publication which emphasizes market timing and stock selection for precious metals investors. He is also the author of the 2015 book, The Coming Renewal of Gold’s Secular Bull Market and his 2017 Gold & Silver Outlook which are available for free on his website.