Gold Price Forecast Per The Rule Of 7

June 17, 2014

gold forecast rule 7Echoes from the old GOLD-EAGLE Forum from late 2010:
In rampaging through my old WORD docs, I found the following post, which may be of interest today...as the first two gold price objectives have been achieved.

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There appears to be no rhyme nor reason to The Rule of Seven (*), but is often surprisingly accurate in its predictions. It is based on the assumption that the initial leg of a new price trend reflects the potential power of the changing forces of supply and demand sufficiently to serve as a guide to the probable extent of the price move. Put another way, using the Rule of Seven, a measurement of the initial leg of the trend is all the information needed to project one or more objectives in the direction of the new trend.

The basic formula is: Measure the size of the initial up-leg by subtracting the low price from the high; multiply that figure by seven; then divide the product by four to get the distance from the low to the first (price) objective. For the next two price targets, divide the product by three for the second objective, and finally by two for the third objective. Note that for each of the three objectives the respective distance figure is added to the low.

The Rule of Seven…2010 APPLIED TO GOLD

Gold chart shows initial leg was from 2001 ($256) to Jan2008 ($985):

gold prediction

Initial First Leg = 985 – 256 = 729
1st price objective is calculated
729 x 7 = 5103
And 5103/4 = 1276
Therefore 1st price objective is: 256 + 1276 >>> $1,532

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2cd price objective is calculated
5103/3 = 1701
Therefore 2cd price objective is: 256 + 1701 >>> $1,957

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3rd price objective is calculated
5103/2 = 2551

Therefore 3rd price objective is: 256 + 2551 >>> $2,907

Indeed and fact the $1,532 first price objective was reached in 2011. And although the $1,957 second price was not reached, it came is at less than 2% of price objective…as gold reached of $1,922 also in late 2011.

Indeed the Gold Price Forecast per The Rule Of 7 has been uncannily accurate in predicting gold’s first two price objectives.  It then logically follows we may see the $2,907 third price objective reached in the not too distant future…as the following chart clearly shows the price correction since late 2011 has reached substantial support, and appears to be putting in a solid bottom as per the Technical Indicators of MACD, CCI and RSI.

https://tinyurl.com/n6bhkfm

Please be cautioned, THIS IS NOT A RECOMMENDATION TO BUY OR SELL ANY FORM OF GOLD. I am merely sharing my research reading with you. But by all means go to a library to read this book, which provides many other little known TA methods. Who knows, old Technical Ananlysis methods may be like old neckties, if one waits long enough the style comes back.

(*) Source:
The Rule of Seven price forecast method is from the book, "TECHNIQUES OF A PROFESSIONAL COMMODITY CHART ANALYST" by Arthur Sklarew (first published in 1980).

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Founder of Gold-Eagle in January 1997.  Vronsky has over 42 years’ experience in the international investment world, having cut his financial teeth in Wall Street as a financial analyst with White Weld. Vronsky speaks three languages with indifference: English, Spanish and Brazilian Portuguese.  His education includes a degree in Petroleum Engineering from the University of Oklahoma, a Liberal Arts degree from Hartnell College and a MBA in International Business Administration from UCLA – qualifying as Phi Beta Kappa and Tau Beta Pi for high scholastic achievements.  Vronsky believes gold and silver will soon be recognized as legal tender in all 50 US states…and many countries worldwide.  You may reach I. M Vronsky at: vronsky@gold-eagle.com and/or vronsky@bellsouth.net

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