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SEPTEMBER 25, 2012
Over the past seven years, the US dollar-denominated gold and silver markets have exhibited a technical pattern called the "Golden Cross".
This technical formation has registered three times during this period, being followed by explosive upside price movements.
What is a "Golden Cross" you ask?
In technical analysis, a Golden Cross is when a short term moving average crosses over a longer term moving average.
Technically speaking, the Golden Cross is probably the most significant buy indicator, signaling analysts to initiate long positions.
In the chart below, the blue line is the short term moving average, a simple 50 day MA. The red line is the long term moving average, a simple 200 day MA.
Gold's Golden Crosses are encircled in yellow:
Note how every time the blue line crosses from under, to over the red line ( and a Golden Cross occurs ) massive gains in gold ensue.
In late August 2005, a Golden Cross preceded a +66% appreciation to the gold price in a span of less than 9 months.
In January of 2007, a +60% rise in the gold price ensued after this technical cross came to fruition.
Finally, in the thirty-one month span following the last Golden Cross in February 2009, gold more than doubled in price, resurrecting from a mere $ 950 an ounce to approximately $1900 an ounce (+102%).
And guess what?
Last week, the gold market gave us a sign! The proverbial "Golden Cross" has appeared again. Look at the gold chart above.
What does this mean?
With QE infinity and global fiat currency debasement firmly intact, it means past performance may more than purport the future in terms of gold ounces vs fiat federal reserve notes.
Let's take a look at gold's past ( post Golden Cross ) price appreciations extrapolated on today's $ 1770 oz gold spot price:
+66% < 9 months => How about gold at $ 2,938 oz this coming June 2013?
+60% < 14 months ==> Maybe gold at $ 2,832 oz by November 2013?
+102% < 31 months ===> Perhaps gold at $ 3,575 oz in April 2015?
It is tough to say exactly which timeframe(s) and or price scenario(s) might play out.
What we cannot deny is that all three of gold's prior Golden Crosses have resulted in strong price appreciations.
What's that you ask? Does this technical Golden Cross analysis apply to silver as well?
Yes, silver indeed has a record of Golden Cross fruitions and subsequent price appreciations.
Check the chart below where again the blue line is the short term moving average, a simple 50 day MA. The red line is the long term moving average, a simple 200 day MA. Silver's Golden Crosses are encircled in yellow:
Note how every time the blue line crosses from under, to over the red line ( and a Golden Cross occurs ) massive gains in silver ensue.
In early October 2005, a golden cross preceded a +103% appreciation to the silver price in a span of less than 9 months.
In November of 2007, a +47% pop in the silver price ensued within 5 months after this technical cross came to fruition.
Finally, in the twenty-five month span following the last Golden Cross in March 2009, silver nearly quadrupled in price, resurrecting from a mere $ 13.25 oz to approximately $ 49.00 an ounce (+277%).
Let's look at silver's past ( post Golden Cross ) price performances extrapolated on today's $ 34.58 oz silver spot price:
+103% < 9 months => How about silver at $ 70.20 oz this coming June 2013?
+47% < 5 months ==> Maybe silver blasts to $ 50.83 oz by February 2013?
+277% < 25 months ===> Perhaps silver at $ 130.37 oz in late October 2015?
Oh, and what is that forming on the righthand side of the silver chart posted above?!
A new golden cross for silver, coming into view. As of this posting, silver's 50 and 200 day simple moving averages are only 50¢ apart, rapidly trending toward a cross confirmation in the near term.
Note too, that all three of silver's prior Golden Crosses have resulted in massive price appreciations shortly thereafter.
Will this coming Golden Cross in silver be any less miraculous than its predecessors?
We doubt it.