Recently, Pierre Lassonde said that gold could have the potential to reach $8,000 per ounce when looking at the gold-to-Dow ratio. He mentions how tangible assets tend to regain parity after previous bull-markets, and the potential for his forecast is supported if the gold-to-Dow ratio his .5 while expressing that the quick and expansive adaptation of NIRP will fuel the fire.
As central banks continue to ease ($12.3 trillion in quantitative easing and 650 rate cuts since the financial crisis), there is a potential for a prolonged bull market in gold . As I noted in "Demand for Gold Rockets Higher," if the renewed momentum were to match nominal gains investors seen between 2009-2011, spot prices would near $2,230 - which is not $8,000 but very respectable.
The 1.61 Fib. extension from the current multi-year low and the 2011 high is $2,460.
In "Gold Looks Promising Long Term," I posted last February that the longer-term outlook for the yellow metal remains in tact. Price action continued to trend in the until it bottomed in December.
What strengthens the cased for renewed optimism is that price action convincingly broke out of the and back above the 2003 .
In "Gold to Retest $1,130 as Dollar Strengthens," I pointed out last March that the dollar strengthening is trouble and the velocity of such would be meaningful. As we've seen throughout last year, U.S. multinationals have been crushed due to the strength in the DXY ,
I also pointed out the descending on the , which is a reversal pattern. After finding support where I thought the last line of defense was before $1,000 oz., gold rallied hard and broke out.
However, even through are strong indicators of price reversals, the real test is that price tends to quickly retest the broken resistance. If that hold, it could be off to the races.
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