What will confirm the claim that this is a generational bull market in precious metals?
*Dow Theory Letters, Richard Russell, April 7, 2006:
"I'm going to start with a rather unusual chart of gold. It's a
monthly chart going back to 1999, the year when the great bull market
started. I want to show how gold tends to move up in increments of 100.
Note how at each hundred level, 300, 400, 500, gold whipped back and
forth -- until it finally climbed to the next 100 level.
Once above 400 the gold bull market began to accelerate, and gold
hardly paused as it climbed above 500 to the 550 level. At 550
something new was added. I had written that from its 1980 bull market
peak of 850, gold headed down in a long bear market that ended in 1999
at a price of 250. The bear market took gold down 600 points. And this
is where the 50 Percent Principle comes into play.
The 50% Principle should only be applied very carefully, and only
during major (in time and duration) moves. The entire bear market
decline consumed 600 points. Half of 600 is 300. We add the 300 to the
price of gold at its bear market low, and we get -- 250 plus 300 or
550. Thus, 550 is the halfway or 50% level of the entire bear market
decline.
The 50% Principle states that if the gold can recover half of its bear
market losses, and stubbornly remain above the halfway level -- then
the odds are that gold will continue higher to test, and probably
surpass, its old high. Thus, gold must now hold above 550 or the
halfway level. If gold can hold decisively above 550, it should, in due
time, rise to test, and probably surpass its old high of 850.
Once breaking above 850, there's no telling how high the great bull
market might carry gold. My only thesis here is that I believe gold is
fated to go further on the upside than anyone is thinking about at this
time. Great bull markets have a habit of going further on the upside
than anyone believes possible.
*This information is solely a highlight of the opinion of a third-party publication and is incomplete. Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.
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