The Rand gold price appears to be at, or very close to a major buy point. In a previous article, I highlighted a possible symmetrical triangle, which then, was an indication of much higher prices in the near and more distant future. This pattern is now setting up nicely, and performing all the technical confirmations that are normally associated with this pattern.

If you look on the chart above, you will see that price broke out of the triangle at about R 8500, and has now returned to test that breakout at R 8500. It is quite normal for price to test the breakout level (in this case R8500) or pullback to the apex of the triangle. What does this mean? It means that gold is either at an ideal buy point, or that the buy point is slightly lower (at the apex of the triangle).

For the target price of this pattern, see my previous article called: “South Africa Beware of the Coming Storm” (follow the link above).

Is this analysis consistent with the outlook for the South African rand and the US dollar gold price?

Below, is a 5 year chart of the US dollar/SA rand exchange rate.

(chart generated on fxstreet.com)

I have drawn a support line, and you will notice that price (dollar/gold exchange rate) is currently at support. This could possibly be an indication that price might bounce very soon. I have also indicated three points, marked with an A. These points are similar, from a fractal perspective. The first 2 points were key or pivot points, from where the price bounced materially. If I am correct, and the third point is similar to the first 2 points, then price should bounce from here.

It is important to note that the points are similar, not identical. Therefore, though there may be a bounce coming, it will not necessarily be identical to the previous two bounces.

A bounce in the price (depending on magnitude) might hold bad implications for the general stock market. Are we on the cusp of another round of risk-aversion?

For more on my proprietary fractal analysis, visit: http://hgmandassociates.com/.

I have also done an analysis of the US dollar gold price, which you will find here.

***

If you find this information useful, please forward it to friends or family so that I can continue to reach more people.

Visit http://hgmandassociates.com/ for more of my current work.

Visit http://goldsouthafrica.com for news on precious metals from a South African perspective.

May God bless you.

Hubert Moolman

"And it shall come to pass, that whosoever shall call on the name of the Lord shall be saved"

You can email any comments to hubert@hgmandassociates.co.za

25 June 2010

In a previous article called “Gold, Dow And The South African Rand” (dated 24 May 2010), I stated: “we will probably have more of these scary drops in the gold price as we continue into this volatile phase of the gold bull market. The good news for gold bugs is that we will also have some huge up days, and the general trend will be very much up.” If you look at the gold chart, you will notice that despite the volatility in the gold price since then, the trend is definitely up. When these scary drops happen, many people start panicking and eventually get “shaken off” this great bull market.

It is important to keep the big picture in mind. When one only focuses on the day to day movements of the gold price, one will be one of those who will lose out. At this point, where gold is going parabolic, you could sell all, and a week later the gold price could be $150 higher (or even more). At this stage of the gold bull, a sharp drop in price is an ideal opportunity to add to long-term positions; it is not a time to panic and sell one’s core holdings. Believe me, while gold is going higher in this bull market, there will be many sharp (daily or weekly) drops.

What is the big picture for gold?

The chart above is a long-term gold chart (thanks to goldprice.org). This chart is the big picture for gold, as far as I am concerned. If you look at the chart, like I do, then it should tell you that the gold price is going to explode upwards very soon. It should also tell you why looking at the big picture is so important, and why focussing on gold’s day to day movement might cost you a fortune. For more information about this gold chart and its analysis, you can purchase my Long Term Gold Fractal Analysis Report (email me for details).

There are also some great signals that I like to use when forecasting where the stock market is likely to go in the future. One such signal or proxy is the value of the South African rand compared to other currencies. The South African rand has been a fairly reliable measure or proxy for risk aversion. When the general markets take a hit and everyone is running for safety, the Rand usually gets hit hard.

Below are two South African rand charts that I have been tracking. I have done some proprietary fractal analysis, which I would like to share with you.

The first is a 5 year US dollar/SA rand chart (generated on fxstreet.com). In a previous article, I have used this chart and more to show why I think the Dow has topped for now. On this chart, I have indicated two black lines as a possible trading range. I have also indicated two possible fractals. I have marked 4 points on each fractal pattern to indicate how they are similar. If the second pattern resolves like the first pattern, then price should break out of that top line of the trading range and make its way towards the 9 price level. This will likely mean that the Dow will visit the 9000 level. This appears to be consistent with fractal analysis I have done on the Dow.

To continue reading the full article, please go 

here

You can find me here for current and educational gold & silver commentary:

http://hgmandassociates.com/

For more precious metal news from a South African perspective, please visit http://goldsouthafrica.com/

Warm regards

Hubert

hubert@hgmandassociates.co.za

DOW

As mentioned previously, the 10 Dow/gold ratio has in the past proven to be a key level, from where either the Dow or the gold price has taken off to new highs at a relatively fast rate. When either the Dow or the gold price has rallied (as explained in the previous article) from the 10 Dow/gold ratio level, the other always went sideways and then eventually down (never higher). See Dow chart (from Yahoo finance) below, where I have highlighted the points where the Dow/gold ratio had turned around at or just below 10.

You will notice that in 1973 and in 1976, after the Dow/gold ratio had just turned below the 10 level, the Dow then turned down (going slightly sideways at first).

In August 2009 (and almost in February 2010), the Dow/gold ratio again tested the 10 level after going as low as 7 earlier in 2009. It has since retreated to the 8.65 level and will soon go much lower (in my opinion). Therefore, in my opinion, we are once again at a similar point in time. Gold is already rallying, and the Dow is about to go sideways and then down. So if one goes by the past, then very soon no upside price action (or at least not much) should be expected for the Dow. In fact, I expect the Dow to test the 2009 low within the next 2 years or so.

Is the South African rand supporting my opinion?

The South African rand has been a fairly reliable measure or proxy for risk aversion. When the general markets take a hit and everyone is running for safety, the Rand usually gets hit hard.

Below is a chart of the US dollar/SA rand exchange rate:

On the chart, I have indicated the points where the Dow actually topped or bottomed. I have also indicated a point where the recent top of the Dow is (19 April 2010). You will also notice that I have indicated a possible trading range between 7.2 and 7.87. The battle to conquer that 7.87 level is currently underway. Should the Dollar/Rand close comfortably above that 7.87 level, we could go to the 8.5 level very quickly. This could likely mean a quick drop in the Dow to possibly the 9000 level.

To continue reading my article (the full article): http://goldsouthafrica.com/2010/05/25/gold-dow-and-the-south-african-rand-by-hubert-moolman/

Warm regards

Hubert

You can find me here for current gold and silver commentary:

 http://blogs.24.com/hubertmooolman

 You can find me here for educational gold and silver commentary:

http://hgmandassociates.com/

 ***

If you find this information useful, please forward it to friends or family so that I can continue to reach people that would not normally read such informative sites as this one. If you would like to subscribe to my newsletter, please send me an email. My newsletter is free and I send it out whenever I feel I have relevant information to share. I do gratefully accept donations though, so that I can continue to research and write. Send me an email for details . 

You can email any comments to hubert@hgmandassociates.co.za

By Hubert  Moolman

Gold

From October 2008 to date the gold price has performed rather well. It is up 77.6% from the intraday low of $682 on 24 October 2008. It is of course not the only good up since then; in fact most goods are quite well up in nominal dollar terms.

If a good is up in price 77% in a period of about 1.5 years it would probably be reasonable to expect at least a slowdown in the pace of price growth or even a gradual decrease. Unless there are very special circumstances present, such as one could probably have in a case of hyperinflation or say an extreme sudden shortage of that good which cannot be immediately replenished etc. one would certainly not expect it to accelerate further at an even faster rate as before.

At this time the gold price exists in a market where there are just such very special circumstances present.

The gold price has been suppressed for at least 70 years, by the existence of fractional reserve banking and its related fiat monetary system (together referred to as the debt-based monetary system).

This debt-based monetary system has increased the money supply dramatically and by association debt levels. The debt based monetary system is on its last legs, and while it is still alive, gold, silver and certain real assets will soon adjust upwards in price (significantly) to compensate for the results (over-valued financial or intangible assets) brought about by significantly increasing debt levels.

This upward adjustment will disrupt the world economy significantly and if it is quick it could ruin the world economy and collapse the debt-based monetary system.

The world is currently much like a man who has a long term loan which he has been using for many years to finance his lavish lifestyle. The loan has a net present value (owing) many times the net present value of all income he would likely be able to make even if he was able to live 2000 years. The terms are that the lender can call on the loan any time. The problem for him is that the lender is one just like him (in the same position). It is only a matter of time before it all comes down crashing.

Like I have said before, the crash is coming; there is nothing that can be done to stop it. I believe some of the pain associated with this crash, as well as some of the significant threats, can be countered by a worldwide debt forgiveness. Impractical as it is, it is probably the only solution that can meaningfully help manage the pain that will accompany this crash in debt and its creations. It could mainly help in that it can help people to focus their efforts on the critical aspects of the world’s economy, such as food supply and energy supply instead of fear brought about by the wholesale uncertainty. You will notice that I wrote people not governments.

 It is like in Egypt before the 7 year famine. Once it was known, that the 7 year famine was coming as well as when it was coming, people could focus on saving food for the famine period.

A well timed and organized debt forgiveness might provide a similar scenario, in that it may help many to prepare like Egypt, did since it would remove a significant amount of uncertainty and the element of surprise.

So, we are indeed at a point in time where extremely special circumstances are present, circumstances that are extremely bullish for gold. Fundamentals are thus telling me that gold and silver could take off to a series of higher highs month after month at any time now.

My technical analysis, in particular my fractal analysis is telling me that we are now in that big move. See below, I have included analysis I sent to my subscribers on 17 April 2010.

Below is a 4 year chart of the gold price.

There are basically 2 patterns or fractals on this chart which are potentially matching. I have marked them as 1 to 4. You will see the 1^st pattern is smaller than the 2^nd. You will also notice that the two patterns are not exactly the same, but there is a similarity.

To identify these patterns one has to use a combination of traditional geometry as well as, more importantly, an “artistic eye”.

WARNING - It is very important to know that one has to be aware of the bigger picture, or longer term chart (fractal analysis) and that this shorter term analysis is consistent with what the longer term analysis is indicating. The longer term analysis is not the subject of this document, however, I am satisfied that it is consistent with this analysis, in order that we can possibly assume the same outcome for these patterns.

So currently we have potentially just hit point 4 at the end of March 2010, and gold should be working its way up to the resistance line, in a relatively accelerating manner.

At this moment, that target could be just over the $ 1300 dollar level, but it should be clearer closer to the time.

Silver

Below is a 4 year chart of Silver

The same as for gold, there are basically 2 patterns or fractals on this silver chart which are potentially matching. I have marked them as 1 to 4. You will see the 1^st pattern is smaller than the 2^nd. You will also notice that the 2 patterns are not exactly the same, but there is a similarity.

Same as for gold, I am satisfied that this analysis is consistent with the long term analysis.

So currently we have potentially just hit point 4 at the end of January 2010, and silver should be working its way up to the resistance line, in a relatively accelerating manner.

At his moment, that target could be just over the $ 21.50 dollar level, but it should be clearer closer to the time.

Closing Comments

I hope this is of use as regards the outlook for the gold and silver market as well as applying it in future analysis.

If you are interested in learning more about fractal analysis, subscribe to my free newsletter (see below).

For more on where gold is going after the $ 1300 - $ 1350 level you can purchase my Long Term Gold Fractal Analysis Report for $50 (email me for details).

For the latest news analysis on precious metals from a South African perspective: http://goldsouthafrica.com/

You can find me here for educational gold and silver commentary: http://hgmandassociates.com/

***

If you find this information useful, please forward it to friends or family so that I can continue to reach people that would not normally read such informative sites as this one. If you would like to subscribe to my newsletter please send me an email. My newsletter is free and I send it out whenever I have something to “say”.  I do accept donations though, so that I can continue to research and write; email me for how.

May God bless you.

Hubert Moolman

You can email any comments to hubert@hgmandassociates.co.za

For news about precious metals from a South African perspective, visit http://goldsouthafrica.com/

By Hubert Moolman

6 May 2010

The worst part of the world’s current financial crisis is still on its way. The enormous debt levels present in our financial system is central to this crisis. This huge debt levels could cause the world’s monetary system to collapse, starting with the weaker currencies and quickly making its way to the major ones. Day by day the premier signal (gold price) of this collapse is getting clearer and should encourage more people to run for cover.

The world economy cannot recover and make progress until the gigantic debt burden is lifted. This can still take more than 10 years. If we have a deep and extreme collapse (in debt) much like the stock market crash in 1929, then it could be 10 years, and off course longer should the crash be less extreme but more distributed. I think 10 years is more likely, since major crashes tend to end in an extreme collapse. A peak in the gold price could be a good signal that we are at or close to a bottom of this debt crisis, and we are still far from a peak in gold.

There are various signs that indicate that we have reached the end of the prosperity part of the debt bubble. Some of these signs I have mentioned before, like the top in the Dow/gold ratio. The gold’s price is also another, it has increased 4.72 fold since beginning of this decade. You can also just look at headlines around the world of countries like Greece having a debt crisis. You can also go and find the following charts (which could be considered a good proxy for debt levels) and you will notice how these levels have consistently increased at least the last 50 years:

• Cumulative rate of growth of M3 and Monetary Base
• Household Debt as a percentage of GDP

You could probably look at your own finances as well as your neighbour’s for evidence of extreme debt levels compared to just a few decades ago.

Debts levels have become a huge burden and it will strangle the world economy for at least the next 10 years.  The debt will have to be settled eventually, voluntarily (unlikely) or by force (death of all fiat denominated debt).  All future production will be severely reduced by the debt obligation and the effects will be a world economy in chaos and possibly with life threatening phenomena like starvation being the order of the day.

That is just how it works when you have huge debt – you will have less of your future income/production available due to the debt obligation that has to be met every month.

This crisis cannot be stopped, but you do not have to be caught up in its worst effects. You have to educate yourself by seeking the right knowledge that will help you prepare for its worst effects.

One of my articles provides some ideas on how to survive the coming crisis. You can also read my blog for more ideas and insights.

***

If you find this information useful, please forward it to friends or family so that I can continue to reach people that would not normally read such informative sites as this one. If you would like to subscribe to my newsletter please send me an email. My newsletter is free and I send it out whenever I have something to “say”.  I do accept donations though, so that I can continue to research and write; email me for how.

If you would like to know more about my fractal analysis you can go to http://hgmandassociates.com/2010/05/11/gold-silver-fractal-analysis-%e2%80%93-short-term-forecast-and-educational-introduction/ for free educational introduction and a short-term forecast.

You can find me here for educational gold and silver commentary and insights:  

http://hgmandassociates.com/

For the latest news analysis on precious metals from a South African perspective:

http://goldsouthafrica.com/

May God bless you.

Hubert Moolman

You can email any comments to hubert@hgmandassociates.co.za

South Africa there is a financial storm coming. This I believe is a financial storm like no other in our time. In a past article I have referred to it as The Greatest Transfer Of Wealth.

Basically the piper is coming to collect what is due and he is going to collect from all holders of fiat currency like the Rand, Dollar, Pound etc. Do not be found with paper money when the piper comes knocking. read more:

http://blogs.fin24.com/hubertmooolman/world-menetary-system-collapse-and-golds-parabolic-rise-14-Apr-2010

You can read the rest of my blog if you would like to know why this storm is coming and how you can protect yourself.

Below is a picture that in some way warns of this financial storm as well as provide valuable insight.

What you see is a 5 year chart of gold in SA Rands.

I have indicated the formation of a technical pattern called a symmetrical triangle.

The symmetrical triangle, which can also be referred to as a coil, usually forms during a trend as a continuation pattern. The pattern contains at least two lower highs and two higher lows. When these points are connected, the lines converge as they are extended and the symmetrical triangle takes shape. You could also think of it as a contracting wedge, wide at the beginning and narrowing over time. From stockscharts.com

Read the rest of the explanation of the symmetrical triangle as well  as how the target is calculated here: http://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:chart_patterns:symmetrical_triangle

Price has broken out of the triangle and it is on its way to its target (please note my indication on the chart is not necessarily how it will get there-but it will get there).

This technical analysis forecast is consistent with my fractal analysis; however the fractal analysis provides a clearer picture of how targets could be reached. Also this is just the beginning it will get worse ... Rand gold at 15000, then 20 000 and on and on.

Conclusion

Educate yourself with the relevant knowledge so that you can properly prepare yourself for this coming crisis. I believe my blog to be a good starting point in your quest to obtain the relevant knowledge.

If you would like to know more about my fractal analysis you can go to http://hgmandassociates.com/2010/05/11/gold-silver-fractal-analysis-%e2%80%93-short-term-forecast-and-educational-introduction/ for a free educational introduction and a short-term forecast.

You can find me here for educational gold and silver commentary and insights:  

http://hgmandassociates.com/

For the latest news analysis on precious metals from a South African perspective:

http://goldsouthafrica.com/

***

If you find this information useful, please forward it to friends or family so that I can continue to reach people that would not normally read such informative sites as this one. If you would like to subscribe to my newsletter please send me an email. My newsletter is free and I send it out whenever I have something to “say”.  I do accept donations though, so that I can continue to research and write; email me for how.

May God bless you.

Hubert Moolman

You can email any comments to hubert@hgmandassociates.co.za

10 For Gold Zero For The Dow

By Hubert Moolman

It seems that gold and the Dow have an agreement regarding the number 10. This number has acted like a “golden ratio” in that things really start to happen before or after the Dow/gold ratio breaches 10, either way.

chart generated on goldprice.org

10 out of 10 for Gold

In Jan 1973 the Dow peaked at 1067, a level it did not managed to surpass until after gold peaked in 1980. In that same year gold bottomed at about the $90 level just after it made a peak close to the $130 level in the same year. Also in 1973 (see chart above) the Dow/gold ratio managed to go below 10 for the first time since it peaked in the middle of the 60’s at about a ratio of 27. At the end of 1973 it retested the 10 level and from there zoomed down to bottom at about the 3.2 level the very next year. From that bottom in 1973 gold doubled in a matter of less than 6 months.

In 1976 the Dow/gold ratio was back to just under the 10 level, where in that same year gold bottomed just above $100. The Dow also peaked in 1976 at 1026. From that 1976 peak the Dow/gold ratio fell to where it bottomed just above 1 in 1980. Again, from that bottom in 1976 gold started a phenomenal rally that ended in 1980 with gold above $800.

The moral of the story is that the 10 level for the Dow/gold ratio was a pivot point (in 1973 & 1976) from where the gold price really took off.

10 out of 10 for the Dow

In 1995 the Dow/gold ratio broke the 10 level once again, however, this time going from under to over 10; from where it ran hard until it peaked at about 45. In that same year the Dow broke out of the 4000 level for the first time and starts a rally that doubled the Dow in less than 2.5 years and eventually taking it to above 11 000 in 1999.

When you look at a Dow chart you will see that the steepness of the price chart changed significantly from the beginning of 1995. Gold was at the $400 level which was a high since about 1990. From 1995 gold was not able to surpass the $400 level until after the Dow peaked in 1999. In fact gold bottomed significantly lower at under $300 at about the same time that the Dow made its all time high.

The Dow/gold ratio also broke the 10 level in 1953, going up, and ran hard until the peak of 27 in the middle 60’s. Since breaching that 10 Dow/gold ratio level in 1953, the Dow ran hard until it peaked in 1966 at 1000, almost 4 times the 1953 level.

The moral of the story is that the 10 level for the Dow/gold ratio was a pivot point (in 1953 & 1995) from where the Dow really took off to new highs.

Who is taking the 10 this time?

At the beginning of 2009 the Dow/gold ratio managed to go below 10 for the first time since it peaked at 45 in 1999. In 2009 it went as low as 7 from where it has gone back to retest the 10 Level in August 2009 and almost again in February 2010 when gold bottomed.

So, it seems that we are again at a point where the Dow/gold ratio has broken through that critical 10 level, from higher to lower than 10, and has retested it in February 2010. This is a situation similar to 1973 as well as to 1976. In fact it is actually similar to 1930 as well, since the Dow/gold ratio also fell through the 10 level after peaking in 1929. The same happened in that it retested (came just short of) the 10 level in 1931 and from there it was off to the races, bottoming at just above 2 in 1932.

Gold’s price increased significantly more since the 10 Dow/gold ratio was breached in 1931, since general price levels decreased in what was termed deflation (remember gold was money so a decrease in general price levels meant an increase in gold’s price).

With the Dow/gold ratio currently at about 9.42, is it going to run off to the 3, 2 and 1 level from here, in similar fashion as it did from  1931, 1973 as well as from 1976? Will the gold price increase in a spectacular manner as it did from 1931, 1973 and 1976?   I certainly think that it will. In fact my own fractal analysis suggests that it will. For more on what the above means for the future, as well as analysis of the gold and silver market you are welcome to check my blog or subscribe to my free newsletter (see below).

History Repeats + History Rhymes = Fractals

The above illustrates how history repeats itself, and therefore in some way how cycles are an inescapable part of life. Fractal analysis recognises that history repeats itself in a self-similar manner. That is that the past tend to repeat itself not in an exact manner but in a reliably similar manner.

If you would like to know more about my fractal analysis you can go to http://hgmandassociates.com/2010/05/11/gold-silver-fractal-analysis-%e2%80%93-short-term-forecast-and-educational-introduction/ for a free educational introduction and a short-term forecast.

You can find me here for educational gold and silver commentary and insights:  

http://hgmandassociates.com/

For the latest news analysis on precious metals from a South African perspective:

http://goldsouthafrica.com/

***

If you find this information useful, please forward it to friends or family so that I can continue to reach people that would not normally read such informative sites as this one. If you would like to subscribe to my newsletter please send me an email. My newsletter is free and I send it out whenever I have something to “say”.  I do accept donations though, so that I can continue to research and write; email me for how.

May God bless you.

Hubert Moolman

You can email any comments to hubert@hgmandassociates.co.za

By Hubert Moolman

19 April 2010

Gold appears extremely bullish in most of the world’s currency. Probably more than it has ever been in the last 30 years. However, there is one currency in which gold is looking really bearish.

That currency is none other than the world’s other true currency called silver. The outlook for silver as a currency is as bright as it has ever been; in fact, in my opinion, there is no currency that will match silver over the next couple of years.

Below is a long term chart of the gold/silver ratio, which translates to the silver price of gold.

chart generated on goldprice.org

The current price of an ounce of gold in real money is about 62.95 ounces of silver. If you look at the long term chart you will see that the highest price was about 100 ounces of silver and the lowest about 14; this is quite a ridicules fluctuation in the ratio between two of the most stable metals and forms of money on this planet. This big fluctuation is not a reflection on gold or silver’s instability, but it is indicative of the flawed monetary system we have today.

What one can also see on the chart is that the ratio has strong resistance around the 80 level and there is good support at the 45 – 50 level. The ratio has been range bound for almost 2 decades between the above mentioned support and resistance.

 Notice that even during the market crash of end 2008; the ratio did not successfully breach the 80 level, despite silver being really weak. After falling back to 60-61 since the crash of 2008, the ratio has tried to challenge the 80 level again but has failed twice (can be seen on a short term chart) at the 70 level. This is a bad sign for gold’s price in silver and it is an indication that the momentum is on the side of this ratio going back to the 40-45 level (relatively fairly soon in my opinion).

On the chart of this ratio, a head and shoulder pattern has developed. Below I have illustrated this on the silver/gold ratio instead.

chart generated on goldprice.org

As you can see there is a reverse head and shoulder pattern developing. The price has broken through the neckline, has come back to test the support of that neckline, and is ready to take off to the target of 0.022 or alternatively stated as 45.45 in terms of the gold/silver ratio. What is also interesting is that this pattern is almost a replica of the extremely bullish pattern on the silver chart.

These are all good signs for silver as well as for gold going forward, since gold’s nominal (fiat) price normally rallies when silver’s gold price rallies.

Why is the case for silver so extremely bullish today?

To get to this reason, one has to know what silver is. If one does not know what silver is then one will not understand what will drive the world’s great silver rush.

Silver has many uses, possibly superior to any metal or at least the equal of any. However, there is one use that makes the other uses virtually immaterial. That use is silvers’ use as money. Here we specifically refer to money’s feature called: store of value.

Now however, silver’s use as money is not quite as active as it used to be. Silver was demonitized many many years ago. Therefore the paragraph above, though true, is not quite an “active truth”. Silver’s investment demand, which is a measure of its demand as a store of value, is significantly smaller than demand for industrial and other application. If silver has realised its true destiny as money, it should be the other way around; investment demand should be relatively much bigger than demand for industrial and other application.

What is the event or circumstance that will activate silver’s use as money, especially its use as a store of value?

That event or series of events (building up possibly to a main event)is the collapse of the current monetary system. As I have written before, the monetary system is extremely fragile and there have been clear signals that it should likely collapse under the weight of the high debt levels today, as it has in the past.

Over the next couple of years, as these events are unfolding and causing people to search for an alternative to fiat currencies, the time will come, and now is, that silver’s investment demand will explode and will eventually take the price of silver to $ 100 and beyond, and hopefully to where no fiat price exist.

Below is a chart of silver:

chart generated on fxstreet.com

I have highlighted two patterns on the chart, to illustrate my fractal analysis. Both are marked by 4 points to illustrate how they are similar.  The scale of the second pattern is bigger than that of the first, so if the rest of the pattern plays out the same as the first, then we should have a big rally that has started already at point 4 (the one on the right side). The first target is the resistance line as indicated on the chart.

If you would like to know more about my fractal analysis you can purchase my Gold or Silver Fractal Report at $ 50 (R 350) each. For more details contact me via email (below).

I am so confident of my gold and silver analysis that I offer to refund your money should gold not hit $ 1300 dollars by 31 July 2010 or Silver $21.50 also by 31 July 2010.

If you would like to know more about my fractal analysis you can go to http://hgmandassociates.com/2010/05/11/gold-silver-fractal-analysis-%e2%80%93-short-term-forecast-and-educational-introduction/ for a free educational introduction and a short-term forecast.

You can find me here for educational gold and silver commentary and insights:  

http://hgmandassociates.com/

For the latest news analysis on precious metals from a South African perspective:

http://goldsouthafrica.com/

***

If you find this information useful, please forward it to friends or family so that I can continue to reach people that would not normally read such informative sites as this one. If you would like to subscribe to my newsletter please send me an email. My newsletter is free and I send it out whenever I have something to “say”.  I do accept donations though, so that I can continue to research and write; email me for how.

May God bless you.

Hubert Moolman

You can email any comments to hubert@hgmandassociates.co.za

By Hubert Moolman

14 April 2010

We could be very close to the end of a financial era that started about 1971. The monetary system as we know it today, which is backed by a changing (non stable dollar), appears to be in its final stages and just waiting for a fierce run to gold, silver and certain other non monetary assets, to provide the death blow.

The death blow could be provided by the massive increase in the “paper prices” of gold, silver etc. over the next couple of years, which could lead to an end of confidence in fiat money and other debt based financial assets.

The current monetary order will be exposed for the fraud that it is, and it will collapse just like the monetary orders before i.e. the gold exchange standard and the Bretton Woods standard.

 The biggest losers will be those that are significant holders of fiat currency. However, a collapse of the world monetary system is such a serious and profound issue, that we will all probably be losers (this generation at least).

Below is a 200 year Dow/Gold Ratio chart from www.sharelynx.com. (Thanks to sharelynx.com for this useful chart and many more.)

In the last century the world’s monetary order (rules) were significantly changed during the following periods:

1. In 1929 to early 1930’s when the gold exchange standard collapsed.
2. In the late 1960’s finally collapsing in 1971.

These changes were brought about by the presiding powers over the system due to the pressure on the questionable system, which could be seen in the fact that financial assets (non real assets or intangible) assets had become way over-valued. In other words, the claims on tangible assets were not supported by the relevant tangible assets at an equivalent basis. There were thus way more claims than tangible assets.

What is very interesting about these dates above (when the rules were changed), when looking at the Dow/Gold ratio, is the fact that the Dow/Gold ratio had just peaked some years before that, in 1928 and in 1965 respectively.

Recently the Dow/God ratio has of course peaked in 1999 and here we are in 2010 at a time where the world’s monetary system is again fragile. Evidence of this is easily found when looking at the financial landscape especially since 2007. Here events such as the stock market crash of 2008, Iceland, Greece to name but a few.

A change is gonna come, as a famous song goes. However, this time it might be different due to fact that the final direct link between gold and dollar was already removed in 1971. How much more corrupt can you make the system? In other words, what else could be done to relieve the pressure on the system?

 So this time there might be no change of the rules by “the powers that be” in order to relieve the pressure on the system as was done in 1933 and 1971, but instead, we might have the system finally collapsing by itself - by way of a devastating hyperinflationary scenario. Time will tell what it will be in the not too distant future.

Why is Dow /Gold ratio important regarding the world monetary system?

Well, it is important to know that the Dow/Gold ratio is an indicator of whether stocks are over- or under-valued in relation to real money. Also, stocks are a very significant and important financial asset; therefore, the Dow/Gold Ratio is also an indicator to which extent financial assets could be over or under-valued in relation to real money or to which extent claims on tangible assets outweigh or under weigh tangible assets.

When claims on tangible assets outweigh tangible assets (high Dow/Gold ratio or financial assets are over-valued), that premium is normally reflected in the debt levels in the financial system. Why? Simply because we have a debt based monetary system.  If you study the simple basic accounting formula: Equity = Assets less Liabilities this will become even clearer.

So in 1999, as in 1928 and 1965, the peak in the Dow/Gold ratio was likely indicating that the weight of debt brought about by the very same monetary system has reached critical levels and could eventually collapse the fragile monetary order.

Implication For Gold

It is interesting that gold peaked about 14/15 years after the peak of the Dow/Gold ratio in 1965. If we had to extrapolate that to the peak in 1999, we get a possible peak in 2013/2014. In my Long Term Gold Fractal Analysis (see below), I forecast gold to peak in late 2012 for the earliest.  Given the fact that these mutually exclusive forecast are so close, I have a feeling history might just rhyme once again.

Closer to the time I should be able to pinpoint the exact time when gold will peak, using fractal analysis.

Gold Fractal Analysis Report

In my Gold Fractal Analysis Report, I see gold going past the $ 1226 peak soon, past the $1 300 in the not distant future, then past $ 1500 and then past $ 3000 as a minimum.

Gold, generously keeps confirming my long term view from the Gold Fractal Analysis Report. For example, in a previous article (24 August 2009) I had these to consolidations on the gold chart:

chart generated on fxstreet.com

chart generated on fxstreet.com

I made the argument that these two consolidations were similar and therefore gold will start a powerful move to the upside just as it did after the first consolidation in 2007. Soon afterwards gold started that move to $1 226 and thereby confirmed the match between the two fractals (consolidations), and what followed after them.

If you look at a gold chart you will see that what followed after the first consolidation was a strong up move that eventually formed a flag/pennant type formation. Another confirmation came over the last few months when after the second consolidation above, an upside move came which eventually also formed a flag/pennant type formation (our current 5 month plus consolidation).

So the similarity of the two consolidations is thus still continuing today.

We are now waiting for a relatively fast move above $1226 to give us more confirmation that the two patterns will play out in the same way, followed by gold rallying towards $1 500 over the next 3 to 6 months. However there will be a twist as to how these patterns will match over the longer term. That twist is determined by the longer term chart or cycle. The nature of this twist is evident in my Gold Fractal Analysis Report.

My Gold Fractal Analysis Rreport also indicates that we are in the second phase of this gold bull market and this second phase started at about October/November 2008. Further to this it indicates that the best part of the gold bull market lies ahead.

I sell my Gold Fractal Analysis Report at $50 (R 350). If you are interested please contact me via email (below). I believe it is worth the $50 (R 350) and so do those who have bought it. It is clear, concise and easy understandable even by a novice, as one of my readers has proclaimed.

I am very confident in the forecast made by this analysis and therefore I will give you your money back if the gold price does not reach $ 1300 per ounce by 31 July 2010.

If you would like to know more about my fractal analysis you can go to http://hgmandassociates.com/2010/05/11/gold-silver-fractal-analysis-%e2%80%93-short-term-forecast-and-educational-introduction/ for a free educational introduction and a short-term forecast.

You can find me here for educational gold and silver commentary and insights:  

http://hgmandassociates.com/

For the latest news analysis on precious metals from a South African perspective:

http://goldsouthafrica.com/

***

If you find this information useful, please forward it to friends or family so that I can continue to reach people that would not normally read such informative sites as this one. If you would like to subscribe to my newsletter please send me an email. My newsletter is free and I send it out whenever I have something to “say”.  I do accept donations though, so that I can continue to research and write; email me for how.

May God bless you.

Hubert Moolman

You can email any comments to hubert@hgmandassociates.co.za

There are extreme sinister forces operating here in South Africa and the world. These sinister forces have always been around, however, they have significanly increased there reach or power over the last 10 or so years.

This increase of power of these sinister forces has caused and is causing the erosion of our personal freedom at an ever increasing rate. I believe this is a severe threat to the future of our society.

Here in South Africa for example FICA (Financial Intelligence Centre Act) and RICA (Regulation of Interception of Communications and Provision of Communication-Related Information Act) are laws that in my opinion have no justification in a society that is series about true freedom. Crime for example is being used to justify these blatant freedom violating legislation. 

I believe crime is not the reason why these laws are enforced upon us. I believe these laws are there to enslave us.

How does an individual LAWFULLY challenge these laws?(please advise on my personal example below)

How do we as a society rid ourselves of such enslaving practices?

Do we do something or do we just roll over and accept this and wait until it is to late and we are slaves? Are we counted among them that give up our freedom for temporary security, and like Benjamin Franklin said: "deserve neither"?

CURRENT EXAMPLE IN MY LIFE - ADVICE NEEDED - comment here or email me: hubert@hgmandassociates.co.za

This may seem like a small matter but I see at as a serious threat to freedom.

I received this letter from my bank (my comments in red):

Dear Mr Moolman

Investec Private Bank is required to maintain and verify client information periodically by obtaining certain documents and relevant information from clients, in accordance with the Financial Intelligence Centre Act (FICA). (Your opinion and privacy does not matter you shall just do as we say you good for nothing slave)

For this reason, please (SLAVE-) complete the attached files to confirm whether the details we have for you on record are still relevant.

In addition, we also require the following documents from you:

• Original or Originally Certified proof of your residential address. Please ensure that the document reflects your name, the physical/erf address of the property and that it is not older than three months. For your convenience, we have attached a schedule of acceptable documents that may be used to provide us with proof of your address.

• Clear original certified copy of your Identity document.

You may submit your original documentation in the following ways:

• Post the documents, marked for the attention of “Busi Hlongwane”, to:
  Investec Private Bank
  PO Box 1826
  Cape Town
  8001
  South Africa
• Deliver the documents to Investec, marked for the attention of “Busi Hlongwane” to: 
  Investec Private Bank
  36 Hans Strijdom Avenue
  Foreshore
  Cape Town
  8001

Failure to submit these documents may result in your account being blocked on 28^th April 2010. (Do as we say slave or there is trouble - This letter is just standard procedure, what would happen if I was suspected of something? Would they shoot me?)

Alternatively, we may be able to arrange a driver to collect the documentation from you.

Should you require further assistance, please contact Busi Hlongwane on 0860 43 43 33 or email

Kind regards (SARCASM - I do not see anything kind about this letter)

Busi Hlongwane

Private Bank

I am gatvol (tired) of this gross disrespect of my personal freedom and privacy and feel that I have to do something about this. Maybe not comply and challenge this law all the way. I will dearly appreciate some advice. Do I do something or should I just roll over?

Warm regards and God Bless

Hubert 

Changing  Gears

By Hubert Moolman

12 March 2010

Since 5 February 2010, the dollar gold price has shifted gears twice with the last shift starting on 3 March and ending on 11 March. We are now in that “sweet spot” gear, and gold is ready to accelerate. From here on, whatever gold is doing to the upside, silver is doing much better.

Gold

Let us talk about gold first. Since 5 February, gold has rallied about $100 from where it has pulled back to $1100, which I think is the launching pad of the next rally. This next rally will be stronger than the previous, which started on 5 February.

The reason for my thoughts above, are mostly explained in my previous article. There I explained that the gold chart is following a pattern similar to the big consolidation since March 2008. It is my believe that the pattern is coming to a stage where a big move up is about to happen, which is similar in nature to what happened on 2 September 2009.

Look at these charts below, and you will understand why I formed this believe.

Above is the latest consolidation with 8 points I have marked (chart generated on fxstreet.com)

Above is the last part of the last big consolidation which ended in September 2009. I have marked 8 points to illustrate how it is similar to our current consolidation. (chart generated on fxstreet.com)

As you can see that the last part of the latest consolidation is similar to a pattern just before the 2 September 2009 action. This will be confirmed when gold breaks through the $ 1125 - $ 1130 level, any time from now to early next week. From here gold should challenge the high at $1226. On another gold note, it is also interesting to see that the Rand gold price is about to break out soon. It is a great time to be a South African gold bug because the Rand gold price is about to start a major major gold rally!

Silver

At this point in time silver is the ultimate currency to be in. Even with gold looking as promising as it is, it is nothing compared to silver. I think, by the time gold has jumped to $ 1500 dollar, silver will have flown past $30.

Silver will now realise its true nature as a currency, a currency that is as good as gold is a currency. The world’s fiat currencies are all sinking and silver and gold are rising. Due to increasing demand for quality means to store value, silver’s investment demand will now start to take centre stage, and this will blast silver past its all time high set in 1980, in the not too distant future.

An investment in silver today, for me, is as they say a “no-brainer”. For me, an investment in silver using Rands is an absolute must.

I have done some fractal analysis for silver and gold based on similar analysis as here and in previous articles. These are more medium and longer term in nature and provide me a “map” of how silver is going past $30 and gold past $1 500. If you would like to know more about this, you can e-mail me (see email address below). You might notice that I write a lot about fractals. The reason is simple: they work if applied correctly.

***

If you find this information useful, please forward it to friends or family so that I can continue to reach people that would not normally read such informative sites as this one. If you would like to subscribe to my newsletter please send me an email. My newsletter is free and I send it out whenever I have something to “say”.  I do accept donations though, so that I can continue to research and write; email me for how.

If you would like to know more about my fractal analysis you can go to http://hgmandassociates.com/2010/05/11/gold-silver-fractal-analysis-%e2%80%93-short-term-forecast-and-educational-introduction/ for a free educational introduction and a short-term forecast.

You can find me here for educational gold and silver commentary and insights:  

http://hgmandassociates.com/

For the latest news and analysis on precious metals from a South African perspective:

http://goldsouthafrica.com/

May God bless you.

Hubert Moolman

You can email any comments to hubert@hgmandassociates.co.za

Gold History Repeats Itself

By Hubert Moolman

14 February 2010

The gold price reached an all time high of $ 1226 on 3 December 2009. It has since retreated to $1044 on 5 Feb 2010. I believe this to be the bottom of this retreat, and you will understand why after reading the rest of this article.

Since the high of $ 1 226, gold has actually formed a familiar pattern (fractal). Fractals are best explained visually and therefore I include the pattern gold has formed since 3 December 2009 below:

chart generated on fxstreet.com

As you can see it is an ABC type of correction. It looks like a “U” followed by a “W”.

Below is what I perceive to be a similar correction, which is actually the most recent large correction since gold hit $ 1000 for the first time.

chart generated on fxstreet.com

Again as in the first, one can see a “U” followed by a “W”. It is interesting that in the first, the “U” is big and the “W” is small, whereas in the second it is the opposite.

Now, the fact that 2 patterns are similar is not a guarantee that they will play out in the same way. One has to consider the context in which both patterns occur in order to better predict what comes next. Also one has to “set” certain confirmation standards such as a break of a trend line or a break of a previous high etc. See my previous article for an example of 2 similar patterns playing out in similar manner after certain confirmation standards were met.

Context

If one considers these 2 corrections, one will notice that both come after a strong rally. They both come after an all time high. Further to this, gold is in a strong bull market which was confirmed when it broke out of the $1000 level last year September. We also have a big head and shoulder pattern of which the target is R $1300 and has not been met yet, but is still valid. We even have a huge cup and handle pattern which has a target of $ 1500 plus, which has not been met and is still very much valid.

Confirmation Standard

What needs to happen to confirm that these patterns will play out in the same way? First of all the price must cross the down trend line which is currently at the $ 1100 level. Then of course it needs to challenge the peaks and eventually break the highest. Also very important is that it should not violate certain support, which makes the pattern invalid. What is also interesting is that the forming of this pattern actually confirms the validity of a previous analysis of 2 patterns – see the article linked above.

Conclusion

I expect gold to go over the $ 1100 level this week and confirm the “pattern”. Gold will soon go on and reach the $ 1300 and $ 1500 target. I therefore expect a very strong rally starting this week.

 In the longer term, based on similar analysis as above, it will be 1979/1980 all over again in the gold market with a bit of a twist regarding scale or time (more on this and what this means in future articles and my blog).

If you would like to know more about my fractal analysis you can go to http://hgmandassociates.com/2010/05/11/gold-silver-fractal-analysis-%e2%80%93-short-term-forecast-and-educational-introduction/ for a free educational introduction and a short-term forecast.

You can find me here for educational gold and silver commentary and insights:  

http://hgmandassociates.com/

For the latest news analysis on precious metals from a South African perspective:

http://goldsouthafrica.com/

***

If you find this information useful, please forward it to friends or family so that I can continue to reach people that would not normally read such informative sites as this one. If you would like to subscribe to my newsletter please send me an email. My newsletter is free and I send it out whenever I have something to “say”.  I do accept donations though, so that I can continue to research and write; email me for how.

May God bless you.

Hubert Moolman

You can email any comments to hubert@hgmandassociates.co.za

IS THIS IT FOR GOLD?

 By Hubert  Moolman

 24 August 2009

 It has been just more than 17 months since gold reached the $1000 level for the first time. Gold has been consolidating since that time in a range of $680 to $1000. The price pattern that it formed during that period is actually very similar to the consolidating pattern formed during 12 May 2006 to 16 August 2007. The main difference being:  the range of the previous consolidation being shallower at a range of $542 to $730 as compared to the latter. Below are 2 charts illustrating the latter parts of the 2 consolidations. The similarity of the 2 consolidations has been highlighted by other market commentators and I have been watching it for a while myself. Look at it and judge for yourself.

chart generated on fxstreet.com

chart generated on fxstreet.com

  For me, If gold moves above $972 in this week or next week, stay there and move past the $1000 the first or second week of September, then we have a very accurate correlation between the 2 consolidations. This will open the way for a move to $1300 and then $1700 as a minimum.

 The outlook for the gold price is more bullish than that though and in my opinion a move past the previous all time high, in the next  PLUS/MINUS 3 weeks will translate into a parabolic spike which will eventually take gold past $4000 faster than most people think. Yes, that is $4000 dollars and I believe it will happen before 2012. Yes it might appear to be a bold statement for some, but that is what I believe the gold price chart and fundamentals are telling me, and until something significant happen that is contrary to this view, it will remain my view.

For me, the big question is, what does this hugely bullish looking dollar gold chart signal for the future? Also, when gold makes this big move, what will happen worldwide? Will it be business as usual or will there be a major crisis or more than one crisis. For my view on this please check my blog, where I have posted some articles on this topic and will continue to do so as events unfold.

What it does tell me is that we are facing an international monetary crisis. The outlook for the world’s so called reserve currency (read the world’s currency) as measured in gold is bleak. It signals hyperinflation for more than just the United States of America. There will be hyperinflation, for me that is a certainty. The only thing uncertain is the period of time. The period from1979 to early 1980 was actually a very similar period to what we are facing; however, it could very well have just been a prelude to the death of paper currency which we are possibly facing today.

When I say hyperinflation then I am here referring to this “definition”:

 IAS 29 – Financial Reporting in Hyperinflationary Economies states the following about hyperinflation:

Hyperinflation is indicated by characteristics of the economic environment of a country which include, but are not limited to, the following:

 (a) the general population prefers to keep its wealth in non-monetary assets or in a relatively stable foreign currency. Amounts of local currency held are immediately invested to maintain purchasing power;

 (b) the general population regards monetary amounts not in terms of the local currency but in terms of a relatively stable foreign currency. Prices may be quoted in that currency;

 (c) sales and purchases on credit take place at prices that compensate for the expected loss of purchasing power during the credit period, even if the period is short;

 (d) interest rates, wages and prices are linked to a price index; and

 (e) the cumulative inflation rate over three years is approaching, or exceeds, 100%.

 However, I prefer to amend this definition by placing gold instead of the highlighted words. I do this because the nature of this hyperinflation will be global, so most if not all paper currencies will be affected. So if you read the definition again (inserting gold), you will probably understand, as I do, why gold will reach that $4000 and much more in an international monetary crisis.

There are many other indicators that can help us to make sense of the possible nature, extent, timing and influence of the monetary crisis. These are indicators such as the gold/Dow ratio, the outlook for gold equities, us dollar index, gold/silver ratio and more. Hopefully we can cover some more of this and hyperinflation in future articles.

If you would like to know more about my fractal analysis you can go to http://hgmandassociates.com/2010/05/11/gold-silver-fractal-analysis-%e2%80%93-short-term-forecast-and-educational-introduction/ for a free educational introduction and a short-term forecast.

You can find me here for educational gold and silver commentary and insights:  

http://hgmandassociates.com/

For the latest news and analysis on precious metals from a South African perspective:

http://goldsouthafrica.com/

 ***

If you find this information useful, please forward it to friends or family so that I can continue to reach people that would not normally read such informative sites as this one. If you would like to subscribe to my newsletter please send me an email. My newsletter is free and I send it out whenever I have something to “say”.  I do accept donations though, so that I can continue to research and write; email me for how.

To read more of my work you can read the rest of my blog: http://blogs.24.com/hubertmooolman

 May God bless you.

Hubert Moolman

You can email any comments to hubert@hgmandassociates.co.za

Gold and Economic Indicators

By Hubert Moolman

15 May 2009

People use various economic indicators to make economic decisions that influence their wealth. It is critical to use accurate economic indicators of the conditions that influence wealth. This is true in normal times and more so in times of crisis; poor decisions could be disastrous even wiping out all of your wealth.

Money plays and extremely important role in establishing or interpreting the various economic indicators that people use. This is because it is the standard by which value is measured. It therefore follows logically that money should have value. Money is thus the ultimate measure of wealth, it can be considered as being generic value or seen as the building blocks of value. This is money’s role as a unit of account.

Example – When people refer to someone’s net worth, they use the dollar (wrongly perceived as money) as the measure when saying he is worth 5 billion US dollars. They also use the wrongly perceived money as the measure of the worth of a company or a trust etc. This is done despite the fact that the assets of the person, the company or the trust might be materially different from one another.

Simply put, we value/measure most assets in money terms.

What is extremely important when correctly measuring something is the actual measure one uses. The measure needs to be consistent, that is it should be the same today as it was yesterday. If the measure changes then one will draw incorrect conclusions or make bad decisions.

For example, we measure time in seconds, minutes and hours. These measures are consistent since the time we started using them. Imagine your watch is running slow. You will be late for meetings if you use your watch as a measure of time, whereas you would probably be on time if you were using a watch that is displaying the correct time. The difference between the two watches is that the measure (seconds, minutes etc.) of the “correct time” watch is consistent whereas the measure of your slow watch is always changing (the minutes and seconds are probably getting longer).

In the same way that a slow running watch causes you to make wrong decisions about when to leave for an appointment etc. and thus affecting your timeliness, using a flawed money to calculate various economic indicators such as inflation will cause you to make the wrong economic decisions.

So given the above, it should be clear that money needs to be consistent, it should be a constant, just like minutes or metres. A SA rand, a US dollar or a  British pound is not money, because that  (exchange rate or notional value) which supposedly makes it a measure changes all the time.

Gold, however is money. Its mass, which makes it a measure, is consistent. An ounce of gold today is the same as an ounce of gold yesterday. Remember, it is not the dollar price that makes gold a measure.

Inflation rate or Deflation rate, GDP, Turnover and Profit are all examples of economic indicators that are measured or established by money as an input. We use a flawed input for these economic indicators, therefore we get flawed indications. Using these indicators will usually cause us to make bad economic decisions. This causes a great misallocation of economic resources worldwide.

Let us look at a few examples in South Africa.

Example 1

Below is a chart of house prices in South Africa in rand terms. This therefore uses the rand as a measure.

based on ABSA’s average house price index

Below is a chart of those same house prices in South Africa in gold (Krugerrand terms). This therefore uses the Krugerrand or gold as a measure.

based on ABSA’s average house price index converted to gold terms

Notice the big difference in the story that these 2 charts tell regarding house prices in South Africa since 2002. The perception in South Africa is that house prices have increased significantly and almost consistently from 2002 to 2008. This perception is wrong, and it is brought about by the inconsistent and false measure (the rand) used.

The second graph gives us the true picture because it uses a consistent measure (an ounce of gold). In gold terms house prices went up from 2002 to 2004, and started to go down from 2005 to 2008 to almost 2002 levels.

Example 2- From a previous article of mine

The official cumulative inflation rate in SA from 1 Oct 2005 to 1 Oct 2008 was 24.82%. The official inflation rate is calculated using rand as money, therefore using rand as a measure.

For the same period, I have calculated an inflation rate using gold as money, instead of rand.

Here is the calculation extracted from the article:

“So at the official inflation rate of 24.82%, a certain amount of goods would cost 24.82% more in 2008 than it cost in 2005, if we use rands as money. If we look at what the same goods would have cost in 2005 in gold ounces and compare it to what it would cost in gold ounces in 2008, we would do the following.

Price of gold on 1 Oct 2005 was R 2 986

Price of gold on 29 Sept 2008 was R 7260

(Please note that I used the closing price of GLD as listed on the JSE))

In 2005 the goods cost 3.35%(100/2986) of an ounce of gold.

In 2008 the goods cost 1.38%(100/7260) of an ounce of gold

The price of the goods is deflated by 58.81%(deflation) in gold terms.

So in fact, if we were using gold as money, the price of the goods would have been significantly lower. So we actually have deflation when we use gold as money.

We equal the goods to 100% and say that the goods in 2008 using rands cost 124.82% (100+24.82%rand inflation) and using gold ounces it cost 41.19% (100% less 58.81% deflation)

That gives us a real cum. inflation rate of 203% for the 3 years((124.82/41.19)-1). That is about an average of 68% per annum.

One can thus see that using gold as a measure to calculate price changes, we have deflation over that same period instead of inflation. If we want to measure the real rate that the rand has deflated over the 3 year period then we use gold as the constant and come to a rate of 203%. Or put another way, real inflation over the 3 year period was 203%.

Again, the official inflation rate (loss of purchasing power due to using of the rand as measured in rands) of 24.82% is wrong since it uses a flawed measure, whereas the 203 % inflation rate (loss of purchasing power due to using the rand instead of gold as money) is correct.

Conclusion

The so called money that we use today is notorious for causing people to make incorrect economic decisions. It is like when your petrol gage says that your tank is full, therefore you do not fill up before the long journey you are about to undertake. However, in reality, your gage is flawed since you actually had less than a few litres of petrol and therefore get stuck without petrol a few kilometres on your journey.

The so called money that we use today is notorious for causing a great misallocation of resources worldwide. The housing bubble is testament to the fact that there has been a great misallocation of resources. Huge amount of resources were invested in housing that should have been invested in other needy areas.

People get an increasing amount of rands as wages but in reality they are getting less real value.

In order to protect yourself from this fiat based fraud, you have to make sure that the economic indicators that you use are honest, it is fundamentally correct and it is relevant, so that you can make properly informed economic decisions.

Wealth should be measured in tangible assets. Some assets are better than others to use as a measure of wealth.

Gold was and is the ultimate form of wealth. It is the epitome of wealth. There is thus no better way in which to measure wealth. All tangible assets should and can be measured in terms of gold. Using gold as money and therefore as the ultimate measure of wealth, will remove all the false signals that fiat based measures give.

***

If you find this information useful, please forward it to friends or family so that I can continue to reach people that would not normally read such informative sites as this one. If you would like to subscribe to my newsletter please send me an email. My newsletter is free and I send it out whenever I have something to “say”.  I do accept donations though, so that I can continue to research and write; email me for how.

If you would like to know more about my fractal analysis you can go to http://hgmandassociates.com/2010/05/11/gold-silver-fractal-analysis-%e2%80%93-short-term-forecast-and-educational-introduction/ for free educational introduction and a short-term forecast.

You can find me here for educational gold and silver commentary and insights:  

http://hgmandassociates.com/

For the latest news analysis on precious metals from a South African perspective:

http://goldsouthafrica.

May God bless you.

Hubert Moolman EL (Economically Literate)

You can email any comments to hubert@hgmandassociates.co.za

By Hubert Moolman

April 2009

There are so many people that write to me stating that gold will not go very high, not even over the $1000 mark, because certain individuals and institutions do not want this and because it is not in their interest, they will take the gold price down.

In addition to this there is so much talk about how the gold price is manipulated. So, I thought that it is time for me to at least say something about this issue.

When I hear of this so called manipulation and how there are powerful people who will keep beating the gold price down, there are two things that stand out. One, is the fact that the focus on the manipulation issue is often about the hidden or unknown to many. Two, is how fear is very pervasive in this issue.

The manipulation in gold and silver is not so much on COMEX, and all other gold and silver markets; it is much bigger than that. Also the gold price is not being taken down; it was taken down a long time ago, when we started using fiat money.  Its true value was not taken down, it is still there but we need to realise the value by using it as money.

The big manipulation story is quite simple in that gold and silver are not being used as money and has now been relegated to “just another investment” status, therefore not realising its full value to society. The key manipulators are governments and we the people who keep using the fiat money instead of real money.

The bad thing about this is the fact that actually we the people can fight this manipulation by using (as money) gold and silver and by stop using fiat, but we are helpless or paralysed through fear and lack of knowledge. The starting point would certainly be to save our wealth in gold and silver.

Fear contributes enormously to keeping this manipulation going.

The fear factor is so pervasive and is also very evident in how people view the price of gold. So many people are quick to point out how some people with a lot of power will take the price of gold down. This is what in many cases keeps them from accumulating gold and silver.

If you are one of those people, then I would like to give you some advice. Do not be a fool. Rather heed the following advice:

“The fear of man bringeth a snare” - Proverbs 29:25 

“fear ye not the reproach of men, neither be ye afraid of their reviling” - Isaiah 51:7

Fear keeps you in bonds, it prevents you from enjoying the benefits that real honest money brings. Fear prevents you from exercising your God given power. The price of gold will soar past the $1000 marks and marks much higher than that. There is nothing that those so called powerful people can do other than also ride the gold bull.

Physical gold and silver is power to obtain what is considered value, whereas fiat money is a right to obtain what is considered value.

There is a big difference: Power is an ability to act or do, and a right is a claim or a title. With a right your ability to act is dependent on whether you are allowed the power to act.

The ability to obtain value for fiat money is dependent on the issuer of the fiat money. If it is electronic fiat, like money in the bank, then you can use your money provided the bank does not freeze your account. The bank therefore gives power to your right. There are many more ways in which to illustrate why fiat money is a right (a very shaky right) and not power.

The fact is that power breeds confidence, whereas a right breeds fear (fear of the one who grants the right). Dependents on rights eventually lead to a welfare state, people who look to a government to provide for everything instead of using their own ability.

Conclusion

The manipulation of gold and silver is not a secret, it is in the open. Everyone knows that we do not use gold and silver as money when it is by far the most superior form of money. The manipulation can be beaten, however, knowledge needs to be increased, and fear needs to be overcome.

 Accumulating gold and silver is the best way to fight this manipulation, since having gold and silver is power. The gold and silver price and the value of gold and silver should eventually tell the same story. Currently the gold and silver price is undervalued compared to their value, therefore gold and silver is a must buy.

The price of fiat money is being managed and therefore affecting the paper price of gold, but even so, the paper price of gold cannot be successfully suppressed, because of the nature of fiat money. Also, no group of people have so much power to successfully suppress the paper price of gold, it is just fear that makes them seem so powerful. Fiat money will realise its full value of nothing and therefore true money will prosper. 

If you find this information useful, please forward it to friends or family so that I can continue to reach people that would not normally read such informative sites as this one. If you would like to subscribe to my newsletter please send me an email. My newsletter is free and I send it out whenever I have something to “say”.  I do accept donations though, so that I can continue to research and write; email me for how.

To read more of my work you can read the rest of my blog: http://blogs.24.com/hubertmooolman

You can also find my articles at www.oreconsulting.co.za

May God bless you.

Hubert Moolman

JSE GOLD INDEX

By Hubert Moolman

26 April 2009

Below are 2 charts, I would like to share with you.  

The first chart plots the JSE Gold Share Index as well as the Rand Gold Price from Jan 2000 to date. Notice how the gold price has left the JSE Gold Share Index behind since Jan 2006. See how close (touching) these 2 were during 2002 and 2003 and again almost touching at the beginning of 2006. Also notice how the JSE Gold Share Index rallied starting towards the end of 2001 as well as again towards the middle of 2005 to catch up with (touch) the Rand Gold Price. Are we at a point where it should start rallying to eventually catch up to the Rand Gold Price?

 The second chart shows the ratio between the JSE Gold Index and the Rand Gold Price. Notice how the ratio is at its lowest levels since Jan 2000. The average for the ratio since Jan 2000 is about 0.618 and it is currently at 0.3. So assuming a constant gold price, if the ratio returns to its average, the JSE Gold Index could double; if it goes to all time highs it could triple. It is also interesting how dramatic those rallies were at the end of 2001 and middle 2005.

 I believe that we are about at that time where the JSE Gold Index could be ready to dramatically catch up with the Rand Gold Price. The right signals are certainly present; like a bullish $ gold price and lower energy and other input cost etc. I certainly plan to increase my exposure to these gold miners.

****

If you find this information useful, please forward it to friends or family so that I can continue to reach people that would not normally read such informative sites as this one. If you would like to subscribe to my newsletter please send me an email. My newsletter is free and I send it out whenever I have something to “say”.  I do accept donations though, so that I can continue to research and write; email me for how.

To read more of my work you can read the rest of my blog: http://blogs.24.com/hubertmooolman

You can also find my articles at www.oreconsulting.co.za

May God bless you.

Hubert Moolman EL (Economically Literate)

You can email any comments to hubert@hgmandassociates.co.za

GOLD TODAY (sent out to my subscribers 31 March 2009)

by Hubert Moolman

31 MARCH 2009

Below see a daily gold chart from September 2005 to date (31 March 2009).

chart generated on fxstreet.com

Notice the giant bullish flag. Flag patterns are normally considered short-term patterns. However it can be useful for long-term predictions, especially when used in conjunction with other patterns such as the cup and handle etc. It broke out of that flag already on 11 Feb 2009 and has returned to the break-out line (drawn from the March 2008 high to $900) (nothing wrong with that).  A strong bounce from current levels (likely first a drop to the line over the next few days or today) could be the beginning of that big run which has its 1^st major target of about $1300. A drop below the line is possible as it has done 3 times before, without foiling the expected outcome towards $1300 and instead making its way to $850 and below.

Up or down are always the 2 main possibilities. Currently as things stand, both are possible, but a strong move up is way more probable. I expect that we will know the answer within the next 2 weeks.

Below see the one hour gold chart 16 Feb 2009 to 31 March 2009

chart generated on fxstreet.com

Do you see the falling wedge? The falling wedge is a bullish pattern that begins wide at the top and contracts as prices move lower – definition from stockcharts.com .

Look for a break of the top line!

Whatever you do from here, make sure that this bull does not shake you. It could be a once in a life-time opportunity. I keep telling myself that we are in a major bull market for gold, and I keep reviewing the fundamentals for gold, which is as bullish as it could possibly ever be.

If you find this information useful, please forward it to friends or family so that I can continue to reach people that would not normally read such informative sites as this one. If you would like to subscribe to my newsletter please send me an email. My newsletter is free and I send it out whenever I have something to “say”.  I do accept donations though, so that I can continue to research and write; email me for how.

To read more of my work you can read the rest of my blog: http://blogs.24.com/hubertmooolman

You can also find my articles at www.oreconsulting.co.za

May God bless you.

Hubert Moolman

You can email any comments to hubert@hgmandassociates.co.za

Gold Is Ready To Go Very High Very Fast

by Hubert Moolman

9 March 2009

It appears that gold is ready to go very high very fast, as measured in all currencies of the world. It seems that gold is in the process of completing the mega cup and handle pattern that started to form in 1980 when gold was at about US $850. The interesting part is the fact that it seems that we are in the final phase which should take us to about US $ 1 300 (about R 14 000) and eventually to about US $ 1 700 (about R 18 760) in a very short time relative to the 29 years since 1980. Do not be surprised to see $50, $100 and more up days, should key levels be broken.

The correction to about US $900 (and so far reversal to US $ 939) was the confirmation that the pattern is still very much on course. It seems that all major corrections, as is the nature of this pattern, are now completed.  It now needs to get up to US$ 1000 and just above in a short period (with very brief minor corrections on the way there. For more on this cup and handle formation see the article by Jordan Roy-Byrne/Trendsman.

I have to state that it is not the potential high paper prices that make me bullish about gold, but its fundamental nature, and the current situation the world finds itself in. It is not the paper price, but what you can buy with it that matters.

During the correction, it was an opportune time to remind myself of why I am storing my wealth in gold and silver.

This is some of what I came up with: (please note that I am mostly repeating what I wrote previously, but that is exactly what I was doing – reminding myself)

Gold and silver is money and money is gold and silver, and money (real, not paper) is the safest and most consistent store of wealth over long periods of time and is especially important during times of uncertainty. There is a lot of fear and uncertainty today, therefore I store what little wealth I have in money, I store it in gold and silver.

As time passes, more people are realising the fact that the world’s monetary system is fraud and that gold and silver is real money and not the paper money that the world uses today. The traffic is one-way, more, not less people come to the realisation that paper money is fraud and ditch it for gold and silver (the potential is huge). Maybe, right now someone who is reading this is ditching paper money for gold and silver. This fact is what makes me most bullish about silver, since it is the form of money that has the greatest potential due to the fact that it has more room to move from where it is (a demonetized monetary asset) to a fully monetized asset.

The debt levels in the world are enormous, and it is an inescapable fact that debt can only be properly and fully settled with real assets. Some assets are better than others when it comes to discharging debt. Gold and silver are real assets, and due to the fact that they are money, they are the ultimate form of payment and settlement of debt.

Due to these enormous debt levels, assets that are acceptable as proper settlement of debt will be in huge demand if these debts are to be properly settled; and this hold true whether debt levels are extinguished by default as well. Gold and silver is in huge demand, and this will accelerate.

Should the big debtors of the world attempt to “settle” their debt with more debt (inflationary) such as paper promises (like what is currently happening), then paper prices of real assets will explode, with gold and silver leading the way.

Paper money, bonds and other promises to pay are all subject to possible default, and during these times, default is a very common occurrence. Real assets are not subject to default, and gold and silver are real assets that you can hold in your hand, and are financially liquid (liquidity is even more essential during such times).

Paper money, bonds and other promises to pay are certainly at risk of impairment during these deflationary times, due to possible partial default or delays due to lack of debtors’ ability to pay on time due to liquidity constraints. Remember an assets’ value to you is less if you are not able to use it when required.

During inflationary times you are at risk, because though you might get the promised payment, but by the time you get it, it has lost a lot of its value and basically all of its value during hyperinflation.

This is all I have time for now, however it is enough to help me confirm that gold and silver is the best option when it comes to storing my wealth.

If you find this information useful, please forward it to friends or family so that I can continue to reach people that would not normally read such informative sites as this one. If you would like to subscribe to my newsletter please send me an email. My newsletter is free and I send it out whenever I have something to “say”.  I do accept donations though, so that I can continue to research and write; email me for how.

To read more of my work you can read the rest of my blog: http://blogs.24.com/hubertmooolman

You can also find my articles at www.oreconsulting.co.za

May God bless you.

Hubert Moolman

You can email any comments to hubert@hgmandassociates.co.za