Big Picture Of Recent Market Rebounds In 2020

May 10, 2020

Customer Confidence Dropping

The equity markets rebounded more than nearly 3% last week, perhaps due to the Happy Mother’s Day weekend and the reopening of some stores. A number of Wall Street analysts are now forecasting the resumption of the equity bull markets, with obvious encouragement of President Trump’s team.

We continue to stand by our earlier analyses. Now if the picture is so rosy, how come the customer confidence level dropping so drastically?

Chart 1 – Customer Confidence Picture – 1971 to Current

In this article, we review the markets (Dow, Gold & Silver) from the big picture perspective.  Any market movements are short term and good only for active traders.

We use the following 2 ratios as anchor and make near-term forecasts to the end of this year:

  • Dow-to-Gold Ratios (1915-2020)
  • Gold-to-Silver Ratios (1915-2020)

Both sets of data are from MacroTrends.

Big Picture behind Markets

Big Picture Chart A

Similar to the general customer confidence level, the Dow/Gold ratio drops and likely reaches a target of 8 (see below). This implies that Gold continues to out-perform Dow since late 2019 when the virus Covid-19 started to spread world wide.

Chart 2 – Dow-to-Gold Ratio from Last 100 Years

Big Picture Chart B

As we mentioned before, the Gold-to-Silver Ratio (GSR) has reached a historical high value of 120.  We estimated GSR will fall quickly to 60 before the end of 2020.                  

Chart 3 – Gold-to-Silver Ratio for Last 100 Years

Near-Term Market Forecasts

Gold and Dow by 2020 End

Chart 4 – Monthly Ratio of Dow to Gold

Gold & Silver Prices by 2020 End

Chart 5 – Near-Term Gold & Silver Price Forecasts

Summary

We estimated the following values by the end of 2020:

  • Gold = $2500/oz  (from Current $1700/oz)
  • Silver = $40/oz    (from Current $15/oz)
  • Dow = 20,000      (from Current 25,000)

We wish everyone a happy and blessed Mother’s Day, especially to the loving mothers who have contributed so much to our life.

We are not certified or qualified financial advisors.  Please consult your certified financial advisors for actual trading and investing.

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F.T. Dao is a private investor and recently left the corporate world for technical analysis of stock markets.  He holds a PhD degree in physics and has done technical analysis of the market on the side for many years.  He welcomes constructive discussion and can be reached at:  [email protected]  , [email protected]


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