Gold’s bubble ending January 1980:
From low to initial high, gold prices rose $160 in 1,234 days. After regaining that high, gold prices moved $673 in 546 days. 81% of the price rise occurred in 31% of the time. It was an unequal distribution.
Gold’s rally ending August 2011:
From low to initial high, gold prices rose $764 in 3,164 days. After regaining that high, gold prices moved $906 in 693 days. 54% of the price rise occurred in 18% of the time.
Silver’s bubble ending January 1980:
From low to initial high, silver prices rose $5.04 in 1,234 days. After regaining that high, silver prices moved $43.57 in 364 days. 89% of the price rise occurred in 28% of the time. Silver rallies faster than gold, so the larger percentage rise makes sense.
Silver’s rally ending April 2011:
From low to initial high, silver prices rose $16.93 in 2,303 days. After regaining that high, silver prices moved $27.56 in 224 days. 62% of the price rise occurred in 9% of the time.
Thoughts: A blow-off rally in gold or silver will follow, more or less, the 80/20 principle. Expect most of the final price rise in a short time - boring, boring, boring, and then heart-attack exciting.
WHAT ABOUT STOCKS IN A BLOW-OFF RALLY?
Apple stock sold for less than a buck in 2003. It began a blow-off rally in May 2016 from $84 and reached $456 in August 2020. Tesla stock sold for $35 in 2013. It began a blow-off rally in February 2016 at $141 and reached $1,795 on July 17, 2020.
True believers think these rallies in tech stocks have much further to go—new highs are coming, and prices can’t fall much. Count me OUT of that group.
Apple’s run-up ending (so far) August 2020:
From low to initial high, Apple stock prices rose $143 in 875 days. After regaining that high, Apple prices moved $229 in 308 days. 62% of the price rise occurred in 26% of the time.
Tesla’s runup ending (so far) July 2020:
From low to initial high, Tesla stock prices rose $246 in 504 days. After regaining that high, Tesla prices moved $1,408 in 210 days. 85% of the price rise occurred in 29% of the time.
Tesla stock prices experienced a larger blow-off rally than Apple. The percentage move was larger and occurred in a similar amount of time.
For the NASDAQ 100 runup in 1999 – 2000:
The NASDAQ 100 Index achieved 75% of its 1999—2000 bubble rally in 27% of the time. And then fell 80+% in a crash…
Prices for silver and gold rose rapidly for several months during 2020, a mild version of their December—January 1980 bubble rally, and their 2011 rallies.
Their prices will rally much further but are likely to correct first. Technically, gold and silver prices have moved too far, too fast. They are over-bought and due for a correction. Might happen soon, might not.
But suppose gold prices peaked at $2,058 and silver prices peaked at $28.40 in August 2020. Suppose they correct, as markets must correct, back to lower support. Assume after correction, they surpass their August highs around April 2021. This is speculative, but the disastrous consequences of election year politics, pandemic shutdown, Federal Reserve “printing” under their QE4ever policies, and dollar devaluations are not speculative.
Suppose that gold and silver prices rally substantially in 2021 and 2022, after more Fed “printing” and a panic into real money when hedge funds, investors, and central banks tire of perpetual dollar devaluations, inflationary policies, and monetary nonsense.
Suppose gold rallies to $6,000 in August of 2022 and silver rallies to $90 at the same time. Given that speculation, the gold rally, after regaining its $2,058 high, would create 79% of the rally in 22% of the time.
Suppose silver rallies to $90 in August of 2022. That rally would be 82% in 22% of the time.
Will gold prices rally to $6,000 and silver prices rally to $90? Yes, they will, unless the Fed stops “printing,” crashes the economy into a deflationary depression, and the U.S. government balances the budget. Winning the Powerball Lottery is more likely. The issue is WHEN gold and silver reach higher highs, not will they reach higher prices.