The Coming Gold Mania (Part 3)

Senior Technical Analyst
January 8, 2016

iStockphoto. Gold Ingot on a Chart. Gold, Gold, Ingot, Metal, Graph, Chart, Savings, Wealth, Currency, Luxury, Growth, Reflection, Investment. Photo can be reused. Sun Herald Investor. 21 April 2010In the final part of this series we will look at the potential causes of rising precious metal prices, the presidential cycle correlation, and what to expect from gold prices in 2016. Click here to see Part 1 and Part 2.

Causes of Rising Metals Prices

Global Debt Is Almost 3 Times As Big As the World Economy. The Guardian reports that global debt has grown by $57 trillion dollars to $199 trillion dollars since the 2008 financial crisis. Solving a debt problem with more debt is akin to solving an alcohol problem by drinking more alcohol. Eventually, this nonsense will end in an epic crisis.

A Hedge against Government

Most believe inflation is the sole cause of rising gold prices however I agree with Martin Armstrong, who said, “Gold is the hedge against government, not fiat or inflation.” Though inflation will seem like the cause of rising gold prices, it’s more accurately a reflection of citizens becoming concerned about their futures. This distinction will nourish the fear side of the next speculative bubble as citizens grow increasingly uncertain about the direction of government and politics.

The Next President   

The next US President is critical to gold and silver prices. I could see a President like Trump making drastic across the board changes. These modifications would upset the masses, and countless groups would become increasing discontent. His provocative statements and views would assuredly divide many in society. Hillary, on the other hand, would be somewhat less upsetting to society; her presidency would be status quo as another career politician takes office. I don’t envy anyone who takes the jobs; they are going to have their hands full.

The Presidential Correlation

The 8-year gold cycle has origins dating back to the 1970’s, bottoming approximately every 32-quarters either just before or after a presidential election.

*1976-Election Gold bottomed 69-days before (Democrat)

*1984-Election Gold bottomed 111-days after (Republican)

*1992-Election Gold bottomed 127-days after (Democrat)

*2000-Election Gold bottomed 101-days after (Republican)

*2008-Election Gold bottomed 11-days before (Democrat)

*2016-Election Gold bottomed __-days ______(-------------)

The cyclical nature of the above correlation is compelling. Below is a Quarterly chart illustrating each 8-year cycle low, you can also find this chart on our homepage.

As we begin the New Year, I’m anxious to see the precious metals bull market return. Though much can change over the next few months, I not looking for the arrival of the 8-year cycle low until after July. Each 8-year cycle bottomed a just few months before or after the election, and I will be watching the charts carefully.

We have extensively studied each 8-year cycle low. It’s nearly impossible to pick the exact bottom when they arrive but recognizing and confirming the base is critical. Rest assured that once the bull market resumes, it will become easier to make money; a strong bull market corrects any timing mistakes.


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Pierce Wellington is the Senior Technical Analyst and a head trading consultant. After making unwise decisions early in his trading career, he developed a passion for Education, Technical Analysis and Trading Discipline. He has successfully traded the Gold and Silver markets for over a decade and is a Chartered Market Technician (CMT).

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