Speculative Roadmap For Gold And Silver In 2019

May 3, 2019

Forecasting Gold & Silver Prices

Based on the technical cycle and long term historical ratio (Gold to Silver) analyses, I think the following case is very likely to occur for 2019:  Gold price to reach $2000/oz and Silver price $60/oz.

Key Observation

Gold and Silver are like twins in terms of their prices.  Historically, they often act like money (with intrinsic value) for transaction rather than currency (fiat currency with purchasing power bestowed by government).  The future use of Gold as an anchor for monetary purpose has been hotly debated.  This issue will not be discussed here.  We will analyze gold and silver from investment purpose.

Gold & Silver as Twins

Chart 1 – Gold & Silver Prices

The Gold price and the Silver price are highly correlated (+0.65) over a period of 50 years.  Our earlier Fourier cycle analysis had identified similar patterns as shown in the chart labeled Region 1 and Region 2.

In addition the Gold price tends to lead the Silver price in the rapid rise.

Chart 2 – Silver Price in Detail

Note the following salient points shown in the above chart:

  • The Silver price has reached a recent low point in 2016, just as the Gold price.
  • There is a general trend in increasing trading volume in Silver since 2002.  We expect this increasing trend to continue.

Ratio of Gold to Silver Charts

Chart 3 - Ratio (Gold/Silver) Since 1984

The Gold to Silver ratio oscillates at a different rate since 1984.  This gives us a handle on the value of the ratio in 2019-2020.  While both precious metals are subject to market manipulation via paper derivatives, we do expect:

  • GOLD = $2000/oz, and SILVER = $60/oz in the time period of 2019-2020.
  • This represents:  60% increase in value for GOLD, and 300% increase in value for SILVER from current respective prices.

Chart 4 - Ratio (Gold/Silver) Since 1720

The above very long term Gold to Silver chart are modified from a recent chart given by analyst Dominic Frisby.  We will not discuss the big change since 1860 when the average of 15 jumps to 30.  Note that Gold and Silver are limited resources i.e. they cannot be produced in lieu of big economic expansion.  Many fine hard asset and economic analysts have written in this hotly debated issue on the future of money.

Summary

In this article, we speculated that both Gold and Silver prices will rise in the 2019-2020 time period.  Furthermore, Silver will outperform Gold by a factor of 5.

The results presented here only serve as a speculative roadmap.   We are not certified financial analysts or advisors.

Afterthought

Today is our National Prayer Day.  President Trump led a large religious group in honoring this day.  In particular, he mentioned the prayer of George Washington at Valley Forge.

For National Prayer Day

“Blessed is the nation whose God is the Lord,
    the people he chose for his inheritance” Psalm 33:12

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 term “carat” comes from “carob seed,” which was standard for weighing small quantities in the Middle East.