Gold Price Forecast: Affirming Gold Rise And Dow Index Fall 2019-2020

August 13, 2019

gold bars

A Challenging Question

Recently I was asked by a very dear European friend of royal heritage regarding the direction of gold price. Now this gentleman is an astute investor in major global sectors. So I have to do proper research before I can answer him.

After my detail analysis, I have to conclude what several wise investors including Paul Tudor Jones and Ray Dalio had already done since June by sifting some of their assets into gold. I will also affirm my earlier analysis of July 4 published on this website.

My near term forecast for 2019-2020:

  • Gold will rise to rise to $2200 per oz, then to $2500 before the end of 2020.

  • Dow index will fall to 22,000, then to 17,000 before 2020.

The ongoing US-China trade war does not help. The more recent Hong Kong situation may make our forecasts too conservative.

Our July 4 Forecast

Chart 1 – Golden Line Forecast Revisited

The current rise is similar to the gold rise in 1979-1980! We also expect high inflation which will be caused by interest cuts accompanies by resumption of Quantitative Easing (QE’s).

Near-Term Forecasts: DOW and GOLD

Chart 2 – DOW & Volatility

  • Our favorite indicator for future direction of Dow Index is shown above.

  • Dow index does not prefer high volatility ($VIX). The ratio DOW to VIX usually precedes the fall of Dow by 1-2 years. Hence, we have ample warnings.

  • Do we think the global turmoil will decrease in the near future?

Chart 3 – Forecast of Gold Price

Our Favorite Indicators in Assessing Gold Mining & General Stock Markets

Chart 4 – Reliable Indicators in Percent Bullish Factors ($BPGDM, $BPNYA)

  • Notation:

$BPGDM = the percent bullishness of gold miners

$BPNYA = the percent bullishness of NY exchange participants

  • Clearly Gold mining stocks will overpower the general Equity markets in 2019-2020.

Summary

We affirm our July 4 analysis and update our near-term forecasts here. This is a tumultuous time. We need to be very careful in our investments with our hard earned funds.

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:  ftdao245@gmail.com  , ftdao245@comcast.net

The periodic symbol for gold is AU which come from the Latin for gold aurum.

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