Gold smashes $1,764 mark now going parabolic?
Posted on 09 August 2011 with 8 comments from readers
Anybody who has been following Jim Sinclair over the years will know that this veteran gold bug first predicted that gold would break $1,650 in early 2011 a decade ago. He missed that by a few months but still his record is outstanding.
Nobody has come close in this decade-old bull market for gold in making these calls. Then consider his record as a younger man as arguably the hottest trader in precious metals of the 1970s bull market.
So when Jim Sinclair points out, as he did last week, that once gold passes $1,764 then we have the lift-off for a parabolic ascent in the gold price everybody ought to be paying attention.
$1,769
Well the Bloomberg monitor has $1,769 at the time of writing, so this is it. Mr Sinclair explains in the video listed on the Home Page of this website that his reasoning is purely arithmetical in choosing $1,764.
He has a very distinguished ancestor whose record on Wall Street in the 1920s was outstanding and whose formula for share price movements Mr Sinclair has applied to gold.
From a more fundamental perspective there is also a reason to be very bullish about gold prices from the market turmoil of the past few days. It is not just that gold is an alternative safe haven to T-bonds. It is that the Federal Reserve’s policy response is likely to be QE3, or money printing.
Money printing
Now what more do we need to confirm gold as the only solid money, and silver too, than another bout of money printing? Is this not inflation at its very source and the ultimate driver for precious metal prices?
When this policy action is laid on top of the technical chart position outlined by Mr Sinclair then you really can start to see the parabolic or exponential rise in gold prices that he predicts actually happening.
We will see what happens now. It could be time for gold bugs to knock back a few pills for high blood pressure!
8 Comments posted by readers:
I’d be interested to know why 42 x 42 is significant for gold prices going exponential. Jim Sinclair insists that it’s just arithmetic, but why is the square of 42 the number we are all looking at with excitement?
I guess if someone wanted to hype investors into gold purchase, there is nothing better than to declare an innocently derived number, promote it around the world and wait to see if reaching that number makes enough people feel that they would be foolish to lose out on gold thereafter.
I have no doubt that Sinclair can give a mathematical explanation of the importance of 1764, but what is his motive for doing so? To make money on gold or just an academic way of explaining how gold prices rise in the market?
Ed Note: When you are as wealthy and successful as Jim Sinclair it is hard to know what motivates him – he still answers my emails very politely and occasionally shares some wisdom that I pass on. I like to think he is the old timer who still wants to bag one last really big elephant. But he does not have the gold price under his control so really his insight is more academic in nature.
while gold is probly in store for a temporary pullback, we have witnessed a paradigm shift, and its $2200 by end of year…..more if there is a black monday in october.
Ed., thanks for your interesting note. This does seem to be shaping up to be a really big elephant, and I’m sure that old timer has a big enough bag to put it in!
I think Jim’s commentary is sincere, that he rightly takes pride in his lifetimes acheivements, so there’s most probably a bit of well deserved arrogance, but hey were all human. He sees what is going on in financial markets and does not want ordinary people to lose their lifetimes nest egg that they have worked so hard to accumulate. In fact during the last ten years the gold bugs, GATA, etc, have been ridiculed, put down, and generally slandered, but it turns out that eveything they have said has turned out to have eventuated, or is unfolding before our very eyes. Their record has been spot on, versus the giant vampire squid on the face of humanity which just sucks in other peoples peolpe’s money like a giant black hole and is full of bullshit and lies.
I listened to Sinclair in 2008. He said gold would hit 1200. I loaded up on call options in the 900s. Then gold went down with everything else, I lost 50% and that was that. I guess that was the exception that proved the rule. My luck.
Ed Note: I do also recall his very explicit instruction NOT to load up on options!
When I had a taste of profits from gold I thought I could be clever and trade. I would have done better to have just held which I have done for the last 2 years, Jim Sinclair has helped educate me thats for sure. I cant resist trading the volatility with a small amount of silver, so far so good. One more thing, I am sure Jim Sinclair understands Asian buying of PMs for example, is far more significant for the price than any of his comments, even if others do not.
Ed Note: The problem for traders is that the immediate past is no help with gold and silver, we are in a completely different situation. It is not different this time, the times are different… it is the late 70s not a repeat of the 2000s – the volatility also makes it very dangerous to trade, even the so-called experts get blown out of the water.
think of market as pond surface and a trigger as stone in that pond. (In our case it is realization of peak oil which is triggering fall of fiat and rise of gold.)
energy discharged by stone is carried by atoms happening to be on surface of ripple. elasticity of medium also affects the rate at which this energy eventually gets absorbed in pond, i.e. when market has discounted the event.
one can go in detailed analysis and analogy wih physics, but for sake of simplicity, per atom energy of given ripple is governed by r-squared. 1764 is square of 42.
why 42nd generation of enlightenment with gold-money is important? (that generation – stands for radius in pond of market)
i think jim thinks market has potential for only X generations of realization before entire world is aware of news that we are in for deflation measured in any real money.
another way to arrive at this 42 might have been calculated from wave-1 and wave-2 could of Elliott waves, which is one oversimplified way of wave counting in market pond.
personally i think 2300-2500 is range where market will behave the way jim wants it to behave at 1764.
regards
keyur joshi
here is entire square of number series. (not entire really but i go lazy after it approached 5000)
16 256
17 289
18 324
19 361
20 400
21 441
22 484
23 529
24 576
25 625
26 676
27 729
28 784
29 841
30 900
31 961
32 1024
33 1089
34 1156
35 1225
36 1296
37 1369
38 1444
39 1521
40 1600
41 1681
42 1764
43 1849
44 1936
45 2025
46 2116
47 2209
48 2304
49 2401
50 2500
51 2601
52 2704
53 2809
54 2916
55 3025
56 3136
57 3249
58 3364
59 3481
60 3600
61 3721
62 3844
63 3969
64 4096
65 4225
66 4356
67 4489
68 4624
keyer joshi
You are far too clever for me Sir, the inflation deflation debate is interesting to me, I dare say we shall have deflation, my approach is simple demand may be there but the masses may not have the ability to pay. At present we have both inflation and deflation at the same time. I am going to think hard on your comment, thanks.
Ed it is true trading is very dangerous my last trade was silver sold at 45 back in at 35, I am thinking sell at 60 back to gold and never do it again, thanks.