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REPORT
For long term investors and multi-month traders: “Now is the hour.” The waiting period is just about over. We are days or perhaps a few weeks away from the start of the next major bull wave in gold and quality gold shares. The Delta Long Term turning points # 1 and # 2 are the only thing that has been keeping me from sounding the bullish bugle. This is not a call for short term traders. This is a call to those investors and multi-month traders who have exercised great patience while so many bulls have become negative on gold and gold shares. There are times when we must ignore some of the commonly used technicals and take a close look at exactly how this bull market in the precious metals has been building brick by brick. The foundation is complete and the big move is about to begin. I have posted a number of charts that indicate the testing period is just about complete. The first piece of evidence is the quarterly chart of gold on the next page.
In spite of the fact that the national debt of the U.S.A. increased from nine hundred and fifty billion dollars in 1980 to over nine trillion two hundred billion dollars in 2008, gold has barely exceeded the 28 year old high of $850.
The quarterly gold chart has 4 rising trend lines. None of them have been violated to the down side. The highest trend line has been in force for one year.
GOLD QUARTERLY CHART
Once platinum exceeded the 1980 high of $1,045 dollars it returned to test that break out level 4 months later. Once the test was complete platinum more than doubled in price.
PLATINUM QUARTERLY CHART
Three months after copper made a new all time high it returned to that level and successfully tested it for support. The old high was $1.585. The recent high was $4.24.
COPPER MONTHLY
In a very powerful bull market the Delta lows tend to arrive early and the highs tend to arrive late. It has been very difficult to properly place Delta Long Term # 1 and # 2. There are many reasons why I finally placed Delta Long Term # 2 where I did on this chart. I will explain this further during the coming week. The momentum indicator beneath the chart reached the lowest level since the bull market began. Momentum has reversed its down trend. Gold has corrected 38.2 % of the rise from the bottom that occurred in June 2006.
GOLD WEEKLY
In 1978 gold broke out above a four year old high. It then completed a test of that high in 6 months. The previous high proved to be the new support level. In 2008 gold broke out above its 28 year old high and it successfully completed a test of that high six months later.
Gold 1978 to 1980
The pattern of the break out and successful test of the previous high in 1978 is almost identical to the pattern of the break out and successful test of the previous high in 2008. The test in 1978 required 20 weeks. The test in the current break out has lasted 18 weeks so far.
During the past eight years the HUI gold share index has risen from a low of 35 to a recent high of 519. During that same time period the S & P 500 has fallen about 15%. Obviously there has been a large bull market in the HUI gold share index and a corrective bear market in the S & P 500. The final leg down in the S & P 500 bear market is just getting underway.
If the C wave terminates below the A leg the bottom for the S & P 500 will be below 767.00.
In a regular flat correction, wave B terminates about at the level of the beginning of wave A, and wave C terminates a slight bit past the end of wave A.E. W. P.
Summary
Precious metals investors have a number of enemies. The most powerful enemy is the periodic violent fluctuations that cause doubt and fear to surface. They often surface strongest at the very moment the market is about to turn in our favor. There is a question as to whether or not the U.S.A. really has the gold it states that it has. If the U.S.A. has 260 million ounces of gold in storage, at the current market price of $900 an ounce that represents 234 billion dollars. The national debt is in excess of 9 trillion dollars and unfunded liabilities such as Medicare and social security are estimated to be in excess of 70 trillion dollars. There is absolutely no painless way out of this mess. In my estimation we are on the verge of an explosive move up in gold and silver. The time is ripe, the foundation is complete, and the gold structure is about to rise in a manner that will attract a huge audience and participation by millions around the world. This is called Gold Fever.
The current bull market in gold has in many ways closely followed the path of the gold bull market of the 1970 to 1980 period. World events in the current gold bull market are also similar to world events in the last gold bull market. The finances of the U.S.A. have gone berserk. The political structure is a total mess. Congress has a 19 % approval rating. Government officials that attempt to talk up the system sound like puppets who do not truly believe what they are saying. I am specifically referring to Secretary of the Treasury, Paulson. He may be a good man but he knows there is no painless way out of this mess. This is not a time to sell your gold holdings. It is a time to hold tight regardless of any and all fluctuations. Hold tight and don't let go.
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Disclaimer: The contents of this letter represent the opinions of Ronald L. Rosen. Nothing contained herein is intended as investment advice or recommendations for specific investment decisions, and you should not rely on it as such. Ronald L. Rosen is not a registered investment advisor. Information and analysis above are derived from sources and using methods believed to be reliable, but Ronald L. Rosen cannot accept responsibility for any trading losses you may incur as a result of your reliance on this analysis and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities. Do your own due diligence regarding personal investment decisions.
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