U.S. Coin Collecting

Gold on Track to Reach $1860 – $1920 by Mid 2011

The Golden Parabola is continuing to follow the cycle of the 70's Gold Bull as the U.S. Dollar is further devalued against Gold to balance the budget of the United States at this point in the "paper currency cycle" where Global Competitive Currency Devaluations rule. As discussed in a recent editorial this point in the cycle suggests that Gold will soon enter into a more aggressive higher rise in price as it starts to project the higher Vth Wave characteristics of this new Golden Parabola.

Much of the debt that must be devalued by the U.S. government has not yet been moved to the balance sheet of the U.S. Government. As such, from a fundamental standpoint, we won't know the true height that Gold will achieve until that has been accomplished although we can gauge the progress of today's Gold Bull off of the 70's Gold Bull to a large extent.

Price Inflation and the Price of Gold

We saw price inflation, in general, track Gold in the late 70's, although much of the rise in general price inflation tends to lag the rise in the price of Gold because Gold's rise is directly related to the rise in Dollar Inflation that eventually creates general price inflation.  General price inflation lags the rise in the price of Gold since it takes time for Dollar Inflation to work its way through the pricing environment of the various markets.  Thus, not only are Gold and Silver great hedges against price inflation, but owning Gold and Silver is a great way to pre-empt the ravages of price inflation that are headed our way over the coming years at this point in the paper currency cycle.

CONCLUSION: Current Golden Parabola on Track

The current Golden Parabola has been tracking the Golden Parabola of the 1970's almost perfectly for over a decade.  Today's Golden Parabola is driven by the parabolic growth of the U.S. Dollar Inflation in response to the massive backdrop of debt that exists, today.  We can project price targets as the Golden Parabola grows, but its final height will be determined by the necessary price level for Gold to balance the U.S. budget once all of the liabilities of the U.S. are eventually placed on its balance sheet.  Many of those liabilities will not be transferred to the U.S. balance sheet until late in the Golden Parabola's rise in an attempt to compress the level of discomfort in terms of time that the Dollar Devaluation will create.  Thus, it appears that at this time the terms "Bubble" and "Gold" do not belong in the same sentence.

If you take a look at the chart for Silver you will start to get an inkling of what is to come for theGold price.  It appears that we are just entering the higher sloped rise in Gold that has already begun in Silver; and Silver still has a much higher path to climb into the future.  There is no doubt that Gold has made a nice run since the original Golden Parabola article, but I expect the run to continue into mid-year.

PM Stocks

As a quick note on the PM Stock Indices, this analogous break-out of Gold ushered in higher valuations for the large cap PM stocks in the late 70's.  The PM stocks tend to be re-valued higher in short dynamic spurts, and I am looking for one of those spurts higher for the PM Stock Sector to commence with this break-out in Gold.  I hope to return with an article on the PM Stock Indices in a few days.

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