Gold went from $250 /oz in 2000 to just over $1,900 within the next decade to hit the level of $1,900 in 2011. What if the yellow metal does the same run over the next decade? MarketWatch's columnist Avi Gilburt explains why it can happen.
Back in 2011, gold was rising parabolically — some days even advancing by $50 per day — and heading over $1,900. Breaking the $2000 mark to most was a sure thing.
Gold topped in September of 2011, at just under $1,921, after which there was a multi-year correction within which we now find ourselves.
Meanwhile, in August 2011, Mr Gilburt had written in his column the following thing: "Since we are most probably in the final stages of this parabolic fifth wave 'blow-off-top,' I would seriously consider anything approaching the $1,915 level to be a potential target for a top at this time."
Thus, gold's highest peak hit in September differed from his prediction only within the six-dollar range.
As he says in his MarketWatch article, he came up with this accurate prediction using a 200-year Elliott Wave and Fibonacci mathematics study. To make this market call even more prescient, the analyst identified the downside targets for gold within the correction he expected. He was looking for gold to drop from the 1900 region, down to a minimum of $1,400 an ounce, but, more likely, the $700-$1000 region.
"In fact, if you look at the Gold Bugs Index chart, you will see that projections are calling for an almost tenfold increase in this index over the next decade or so, which will likely increase to a fifty-fold increase in the index over the next 20 or so years, and well beyond that in 50 years. Ultimately, we see the HUI over 15,000," Gilburt says, noting that his calculations are only a matter of mathematics, nothing more.
The analyst also refers to Ralph Nelson Elliott who made an amazing prediction back in 1941:
“[1941] should mark the final correction of the 13 year pattern of defeatism. This termination will also mark the beginning of a new Supercylce wave (V), comparable in many respects with the long [advance] from 1857 to 1929. Supercycle (V) is not expected to culminate until about 2012.”
In 1941, the Dow Jones Industrial Average was around 100. Seventy years later, we are at a multiple of more
than 180 times that baseline.
Gilburt suggests that a base line in the Gold Bugs Index will likely be in the 100-125 region when it finally bottoms. So, based upon this relative perspective, does it seem so unreasonable to foresee this index as high as 15,000 within 50 years?
