Many may have noticed the increased volatility in the gold market, but few realize that for sophisticated traders price fluctuations are often a blessing in disguise. Volatility often provides the best trading opportunities and certain patterns can indicate a bullish or bearish direction. At present a non-conventional bullish continuation pattern has recently formed, the symmetrical triangle, indicating possible significant strength to follow in the yellow metal’s price.

Gold Continuation Chart

Traditionally the symmetrical triangle pattern has at least two short term support points, but in this case, I show the bottom foundation with the long term support line.  This slight difference might decrease the pattern’s success, but is not without utility.  To help verify the continuation pattern I will be looking for an increase in volume on the up side in the coming days/weeks to corroborate the signal.

My price target for this pattern is $2,100. This target is derived by adding the length of the vertical side of the triangle (approximately $400, also the dotted line) to the break out point ($1700). Possible support is the apex of the triangle ($1,615). Tune in for updates on how the pattern and predictions evolve.

…and that’s not all. CitiFX, the foreign exchange portion of Citigroup said that gold’s longer term prospects are $3,400/oz and that the precious metal will outperform major currencies, bonds and equities. Gold has already registered returns of 50% a year for the last 11 years and given the current actions of global central banks and governments, the future for gold is as bright as ever. Citi also says that they will not back down on their long term gold forecast, even if gold takes a severe dip below the support at $1,535/oz.

See the full report by Citi’s analysts:

By Bud Conrad, Casey Research

The Federal Reserve recently announced important policy changes after its Federal Open Market Committee (FOMC) meeting. Here are the three most important takeaways, in its own words:

1. The Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions – including low rates of resource utilization and a subdued outlook for inflation over the medium run – are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.
2. The Committee judges that inflation at the rate of 2 percent, as measured by the annual change in the price index for personal consumption expenditures, is most consistent over the longer run with the Federal Reserve’s statutory mandate. In the most recent projections, FOMC participants’ estimates of the longer-run normal rate of unemployment had a central tendency of 5.2 percent to 6.0 percent.
3. The Fed released FOMC participants’ target federal funds rate for the next few years.

Immediate Reactions

The first item is the most important as it was not expected – and it had an immediate effect on markets. As seen in the chart below, gold spiked higher on the surprise news of extending the zero-rate policy through 2014.

The news prompted a similar jump in silver services:

Keeping rates low requires the Fed to print new money to buy Treasuries, so the dollar weakened against the euro, although the reaction wasn’t as big as in those in the gold and silver markets. This is partially due to the fact that the ECB is on its own campaign of printing money.

The promise to keep short-term rates low for a longer period also caused longer-term rates to fall slightly, as seen in the 10-year Treasury rate chart below, which fell from about 2.05% to 1.95 %, a relatively modest decline.

What Does This Say about the Fed’s Policy?

The most important action of the three was to extend the zero Fed funds rate to the end of 2014. This is a form of easing that could affect more rates than just short-term rates. Furthermore, there is a debate as to whether the action was the result of the Fed’s concern about the economy slipping back into recession. Or, this could also be a bullish sign for the economy and stock market, as the guaranteed low rates could increase investment to improve our economy. Zero rates drive investors to take on risks – such as buying stocks – to gain higher returns. As a result, this induces more investment toward riskier parts of the market, which might otherwise be underfunded. Though the Fed aims to stimulate the economy, we’re more likely to see a slip back into recession rather than see an effective Fed stimulus improving the economy.

The press conference suggested that quantitative easing (QE) remains on the table. As a result, new targeted asset purchases by the Fed are likely in our future. These additional purchases with newly printed money could become inflationary. That is why gold shot higher and the dollar weakened in the short term.

Both the Fed and the ECB have decidedly less-hawkish members and leadership than just last year. Both have now moved toward more money printing to keep rates low. The chart of central bank balance sheet as a ratio to GDP shows that the central banks of the world are clearly “printing”:

Longer-Term Implications

The problem with printing money and promising to do so for years ahead of time is that the negative consequences of inflation only happen after a delay. As a result, it’s difficult to know if a policy has gone too far until years down the road at times. Unfortunately, if confidence in the dollar is lost, the consequences cannot be easily reversed. One problem for the Fed itself is that it holds long-term securities that will lose value if rates rise. The federal government faces an even more serious problem when interest rates rise, as higher rates on its debt mean greater interest payments to service. Due to this federal-government debt burden, the Fed has an incentive to keep rates low, even if the long-term result is higher inflation. However, for now the Fed’s statement suggests it sees inflation as “subdued,” so it’s putting those concerns aside for now.

Along with the promise of low rates, the Fed for the first time gave an inflation target of 2%, as measured by Personal Consumption Expenditures. The actual and target inflation show that the Fed is currently not under major pressure from missing its target… not yet.

The Fed has not even tried to set a target for the unemployment rate, which is only expected to edge below 8% by 2013. The Fed says that that the longer-run unemployment range is 5% to 6%. The big difference from the current level of 8.5% indicates that the Fed faces a greater challenge with unemployment than inflation now.

My conclusion from the Fed’s actions is that it doesn’t care as much about its inflation target as it does about improving the unemployment rate. Thus, it will err on the side of letting inflation rise, if it would improve unemployment. But holding rates too low too long fueled the housing bubble. Repeating the same game will have consequences of malinvestment in the form of new bubbles in the economy. The Fed hopes to restore employment before the negative consequences of loose monetary policy show up.

The Fed provided the accompanying chart of the Fed funds rates expected by the seventeen members of the FOMC. Each dot indicates the value (rounded to the nearest quarter-percent) of an individual participant’s judgment of the appropriate level of the target Federal funds rate at the end of the specified calendar year. Over the long run, the Fed expects the funds rate to rise to around 4.25%. Eleven of the members indicate that the rate will rise before 2015. Only six expect the rate to stay close to zero through 2014.

The above chart should not be taken very seriously, as Fed predictions have been notoriously inaccurate. Furthermore, it’s likely that rates will rise before 2014 as a result of market forces pushing them upward due to mistrust of the currency – measured by rising gold and commodity prices.

The Federal Reserve balance sheet expanded dramatically as the credit crisis became acute in 2008. The Policy Tools (shown below in black) grew by $2 trillion with the QE1 purchase of mortgage-backed securities and the QE2 purchase of long-term Treasuries. This was an unprecedented effort to support those markets, provide liquidity, and drive rates down to zero. A simple extrapolation of similar expansion policies to the end of 2014 suggests that the Fed may require an additional $2 trillion to extend its goals. The problem is that such action would surely weaken the dollar and drive gold much higher. If confidence is lost, rates could rise even as the Fed continues to print and buy securities. The Fed says that it will change its policy if conditions warrant. I think they will be forced to stop this policy well before 2014 is over. Nonetheless, in the meantime, they will plant the seeds of rising prices with ultralow rates.

The gold price is driven by Fed policies and its bias toward printing money rather than defending the dollar’s purchasing power. This Fed bias was again reconfirmed by this announcement. With all the Fed’s renewed vigor toward keeping rates low longer, we can once again reconfirm the ongoing downward slide for the dollar. As a result, gold remains the best investment against the damaging government deficits and central bank policies around the world.

[While the dollar may look good compared to the other fiat contestants on the global money stage, the United States' debt situation is untenable – and various factors could bring it to its knees faster than anyone expects. Don't let it burn you: learn how to protect yourself and your assets.]

John Taylor, the CEO and Chairman of FX Concepts, the world’s largest currency hedge fund, announced that no trader has any purpose betting in favor of the dollar anymore. “Everyone is sure whenever the dollar looks strong, Bernanke will come up with another idea to make it weak,” Taylor said following last week’s announcement by the Federal Reserve to keep interest rates at 0% until 2014. In addition, Taylor predicts QE3, a third balance sheet expansion program by the Fed, will come to fruition sometime in the near future and will do even more damage to the dollar.

Taylor has been bearish on the euro for years but is presently even more short the US dollar than the euro. This relative positioning comes even as Taylor predicts the Greek economy to continue to get “worse and worse”, and that Portugal will soon be the next focus of Euroland decay, which has already begun to hit the spotlight.

The only strength the dollar might see in Taylor’s view is versus the Japanese yen, following a widely anticipated currency market intervention by the Bank of Japan. This will be short lived, however, and Taylor predicts the dollar will resume its decline versus all currencies including the yen soon after.

A weak dollar means higher asset prices, particularly for precious metals, and if no dollar strength can be seen going forward, neither can weakness in gold or silver.

See the full video interview with Bloomberg’s Sara Eisen:

Despite what the media may be reporting, today’s employment gains (243K new jobs, unemployment rate falls to 8.3%) are irrelevant to policymakers. The main reason they are effecting gold and silver today, gold fell about $20 and silver ~$0.60, is because speculators presume the fiscal authorities and the Federal Reserve will need to enact less stimulus given the lower unemployment rate. The reality, however, is less stimulus is not an option for either branch of government.

Obama’s Campaigning Efforts Will Ensure Continued Spending

For the US administration its an election year and keeping the economy buoyed is priority number one with polls showing its the most influential voting issue at present. Its also a historically tested fact known in academia as the “political business cycle” which accounts for the consistent record of overspending and money printing leading into elections.

The Fed’s Hands are Tied

Moreover, there is ample reason to feel confident that the Fed will continue down the path of QE3, their next money printing program, no matter what employment gains ensue. For starters, the Fed’s Chairman has reminded us twice in the last couple weeks of their likely intentions to move forward on this program – once before congress and once during his press conference following their last interest rate decision. The next two high ranking members at the Fed, Janet Yelle and Bill Dudley, have both touted a new mortgage buying program as being essential to re-boost housing in their view. Beyond these verbal commitments, and more importantly, the Fed is bound by a technical constraint which will force them to not only keep interest rates ultra low, but also to continue expanding their balance sheet perpetually.

I recently wrote an article titled “Why the Fed CANNOT Raise Interest Rates” which outlines the fact that the Fed has insufficient capital to raise interest rates and their assets are so vulnerable that the only way to protect them is to accumulate more. Few realize the Fed, at a ratio of 54 to 1, is levered much higher than Lehman Brothers or MF Global before they went bankrupt. The marked difference between the failed banks and the Fed is the Fed can print money to protect themselves and, therefore, will.

Effect on Precious Metals

Any declines in precious metals following this employment report will translate into strong buying opportunities because markets will be surprised when the Fed does not reverse course as they are expecting. Few have realized the technical constraints of the Fed, and this leaves present gold and silver buyers who clue in with an informational edge. Today’s news is an opportunity to buy, and by no means a thorn in the long term gold and silver bull markets.

Bill Gross, the famed bond manager who runs the world’s largest fund at PIMCO gave some sobering insights in a recent CNBC interview.

Bond Prices Have Reached Their Peak

Gross figures that as short term yields fall to 0, and given the recent Federal Reserve announcement to keep rates at 0 until at least 2014, there is almost no room for prices to increase. Remember, bond yields trade inversely to prices so with yields reaching their 0 bound, bond prices are going to top out as well. This has more effects than many people realize as low rates distort capital allocation and destroy the business model of many banks and money funds that rely on a positive yield curve. The long term persistence of zero rates, on top of the Fed’s ‘Operation Twist’, means that banks can no longer borrow short and invest long and earn a profit.

Meanwhile, with dollars ultra cheap to borrow, investors will continue to drive the dollar’s value down and bid up asset prices, particularly in foreign markets in search for a yield. Rare commodities, particularly precious metals, also represent strong places to find returns. With gold appreciating more than 10% last year, and solid returns for the last 11 years, its one example of where investors with access to cheap rates can earn a significant profit.

The Fed Will Need to Monetize the US Debt

Gross says that PIMCO has purchased more than their fair share of Treasury bonds and will not be buying more. He suspects the same is true for other private investors. With more than a trillion dollars in annualized issuance coming out of the US government, the question is who is willing to fit the deficit bill in terms of loans to the Treasury? Foreign governments have largely abandoned major Treasury bond purchases, so the only buyer left is the Fed. The Fed is presently the largest holder of US debt, and they are likely to live up to this role going forward as they pick up the majority of the government’s new bonds coming to market.

Despite the fact the Fed’s Chairman Ben Bernanke promised the congress under oath that the central bank would not monetize the nation’s debt, the Fed has clearly broken its trust on this and many other issues. Most important of which is the so called exit strategy the Fed will embark upon when inflation creeps up, but as we recently showed, the Fed is impotent to raise interest rates, or exit in any form from their unconventional monetary stimulus.

Ron Paul Endorsement

Somewhat surprisingly, Gross put his weight behind Texas Congressmen and Presidential hopeful Ron Paul. Disgusted with the politics as usual from both major parities, Gross stated the obvious in that the fiscal future of the US and the incentives to invest will remain largely unchanged regardless to whether or not Romney or Obama occupy the white house. Ron Paul, to Gross, represents the only chance for revolutionary change and a chance to return the American financial future to a sound and prosperous footing.

See the full CNBC video interview with PIMCO’s Bill Gross:

Many think that whether or not the Federal Reserve will raise rates down the line is simply a matter of discretion. Commentators often discuss the “will” of the Fed to focus on inflation and adjust rates accordingly, but what is missed is how the Fed’s hands are actually tied to an inflationary monetary policy for the foreseeable future.

The Fed’s Cost of Funding Cannot be Raised

The Fed, like most banks, pays interest on the reserve holdings which banks store at the central bank. This is the rate the Fed would adjust if they tried to raise interest rates, but doing so also increases the cost the Fed must pay banks for holding those balances. This is not insignificant, because the size of reserve balances held at the Fed is at historically high levels:

If the Fed were to raise rates by just 1%, the cost to the Fed would be $16 billion dollars. Whether this seems like a lot or a little to you, this represents more than 30% of the entire Fed’s capital base. If all remains equal, the Fed will be bankrupt in less than four years given a 1% rate increase. In the same sense, the Fed cannot raise interest rates to even 4%, the amount the Fed views as “normal”, without bankrupting themselves in less than one year.

Keep in mind, the Fed Chairman, Ben Bernanke, favors this tool the most for “exiting” their extreme monetary policy accommodations undertaken during this crisis, yet he never mentions the cost to the Fed for employing this tool:

Bernanke: “In particular, our ability to pay interest on reserve balances held at the Federal Reserve Banks will allow us to put upward pressure on short-term market interest rates and thus to tighten monetary policy when required, even if bank reserves remain high.”

Bernanke: “Even if bank reserves remain high, however, our ability to pay interest on reserve balances will allow us to put upward pressure on short-term market interest rates and thus to tighten monetary policy when required.”

The Fed’s Balance Sheet CANNOT Shrink

Bernanke has often stated that the Fed will return their balance sheet size to pre-crisis levels, which he fails to mention would involve selling more than $2 trillion worth of assets, but given his confidence the lack of realism in such a claim is not immediately obvious. As recently as last year, Bernanke, before congress, claimed that the Fed’s balance sheet would “normalize”:

Bernanke: “We also continue to plan for the eventual exit from unusually accommodative monetary policies and the normalization of the Federal Reserve’s balance sheet. We have all the tools we need to achieve a smooth and effective exit at the appropriate time.”

The big factor missed in Bernanke’s proposal is again the effect on the Fed’s solvency. The Fed is currently the largest holder of mortgage backed securities (MBS), treasuries, and agency debt, and for them to abandon their post would not leave much demand for them to offload onto. The Fed also holds these assets on their books at prices that they were willing to pay for them with inflationary demand, and do not reflect the real liquidation value. In all, its almost certain the Fed would suffer capital losses if they had to unload massive quantities of these assets, particularly if they do so at a time when nominal price inflation is creeping up which negatively impacts the prices of bonds.

The major issue for the Fed is the fact they are more leveraged than even the worst banks before their bankruptcies, including Lehman Brothers and MF Global. The Fed is leveraged 54 to 1 on their portfolio, meaning losses on their assets are magnified 54 times against their capital. A 2% loss on their asset portfolio would again bankrupt the Fed, and this is true even if the Fed does not unload assets, but just suffers asset mark downs. Because of these restraints, the Fed will not only not be selling assets, but will be forced to keep buying, to effectively cap the prices of the securities they hold so they never suffer nominal losses.

What this Means for Gold and Inflation

Given that the Fed’s hand is forced and that they cannot raise interest rates, or shrink their balance sheet, the Fed is empty of measures to restrain inflation. Raising reserve requirements may be their only choice but the use of this tool would cripple the banking system which is too leveraged to sustain any meaningfully higher reserve ratio. Inflation, therefore, cannot be contained, and the Fed will likely be forced to exacerbate inflationary pressures just to avoid turning insolvent.

Since gold is a major benefactor of an inflationary environment, especially when the Fed is this impaired, prices for precious metals are bound to continue their march forward. The sustained negative interest rates by the Fed will further secure gold’s role as a wealth preservation mechanism as far as the eye can see.

By Andrey Dashkov, Casey Research

In last week’s Metals, Mining, and Money from Casey Research, Jeff Clark estimated that given the magnitude of the correction that started last September, it may take until May 2012 for gold to reach a new high. Let’s take a look at how long it may take for silver to rebound.

It’s a commonly known fact that silver is more volatile than gold. Already in this decade, silver has risen by a factor of 12 from its ten-year low ($48.70 vs. $4.07), while gold has seen about a sevenfold climb ($255.95 vs. $1,895).

This volatility – as you’ll see in a minute – holds for corrections as well. On average, silver’s retreats have been deeper and longer than gold’s. The three big gold corrections we looked at last week averaged 22.8%. Take a look at the three biggest for silver, along with how long it’s taken to recover and establish new highs.

(Click on image to enlarge)

The three biggest silver corrections in the current bull market average to 42.1%.

Our recent correction is the second biggest on record since 2001, but what really makes it stand out is the duration. The 2004 and 2006 declines took only five and four weeks respectively to reach their low points. And it was 31 weeks after the crash of 2008 that silver bottomed. Our current decline, measured from the peak reached on April 28, 2011 to its December 29, 2011 low, spans 35 weeks… quite the determined downtrend.

It also takes silver longer to recover than gold: gold’s three biggest corrections required an average of 57 weeks and 6 days to regain their old highs, while it’s taken silver’s three biggest falls an average of 98 weeks and 4 days to catch up.

So how long will it take to recover from the 2011 slump? We don’t know the future, of course, but the current correction is close to the average of the three in the chart, so let’s apply the average recovery time to our current situation. The average 42.1% correction took 98 weeks and 4 days to recover; using the same ratio, a 46.3% correction would take 108 weeks and 3 days. Counting from the previous peak of April 28, 2011, we wouldn’t break the $48.70 high until May 26, 2013 (based on London PM Fix prices).

It shouldn’t come as a surprise that silver will take longer to return to its old high than what we found with gold in last week’s article. Why? Half of silver’s use is industrial, so a weak economy can drag down its demand. We certainly saw that in 2008.

And an exact date is pure conjecture, of course, and ignores fundamental factors that directly influence the price. 2011 is not 2008. In fact, we’ve already seen an interesting shift in investment activity in both gold and silver markets. The Silver Institute pointed out in a recent market report that “investor activity” was the biggest contributing factor to both last April’s rally as well as September’s selloff. Meanwhile, demand for physical metal has not only held firm but was projected by GFMS to reach a new record high in 2011.

Investment demand is rooted in the metal’s monetary characteristics. It’s not a stretch to say that we expect silver to regain its currency appeal soon, given the amount of worldwide fiat currency destruction. This will be perhaps the strongest catalyst for prices going forward. We wouldn’t want to be without any silver.

If there’s anything that sticks out from this bird’s-eye view of the past ten years of data, it’s that corrections are normal. And just as obvious is the fact that corrections end.

As with gold, the silver bull market is far from over, regardless of any weakness we may see in the near term. Don’t be the impatient investor who gives up too early. And trying to time the market for a short-term profit shouldn’t be the strategy in the midst of a long-term bull market. Instead, keep silver’s fundamentals in mind: its industrial uses are growing and, like gold, silver is money.

That said, we believe that the window for buying silver at $30 won’t be open for too long. The profit you someday realize from silver will be made buying now, when the price is low.

[Precious metals and precious metal stocks can be a solid way to store wealth, but only if you invest wisely. Don't let yourself be robbed.]

Last week, in a matter of less than 7 days, the Federal Reserve led by Chairman Ben Bernanke purchased a net of more than $20 billion in new assets. Despite the fact the Fed is now only supposed to be implementing Operation Twist (a move to sell short term Treasuries in exchange for long term ones) and a reinvestment program (the funneling of maturing mortgage-backed securities into Treasuries), the nation’s central bank is quietly embarking on a major quantitative easing program many were expecting would be accompanied by a grandiose announcement.

Fed Expands Junk Mortgage Derivative Purchases

The programs the Fed has officially announced should not result in any balance sheet growth, yet the Fed’s balance sheet has grown by in excess of $200 billion since the official end of QE2 in June of 2011. What was seen this week, was also unusual as the Fed’s mortgage-backed securities holdings grew substantially for the first time since early 2010. The total pace of asset accumulation by the Fed, which is well within the size range of a major quantitative easing program, is unwarranted given no official easing program is in place nor was formally announced. See the total growth in the Fed’s balance sheet, despite the official policy which is not supposed to expand the overall quantity of assets held by the Fed:

Fed’s Bailout of Europe is in Full Force

Aside from MBS purchases, the other major measure the Fed embarked upon last week was a large increase in loans to the European economy. The Fed lent almost $11 billion to foreign central banks, via their Central Bank Liquidity Swap Lines, and grew their “Other Assets” category, which is speculated to consist of foreign assets, by $2.5 billion. Its not to be forgotten that the loans to Europe are now being done at a cheaper than usual rate, and the payback risk the Fed faces is greater than usual given the major falls the euro currency has recently undertaken. Total outstanding loans to foreign central banks is now in excess of $100 billion, and the secretive “Other Assets” of the Fed is now greater than $155 billion:

Good Time to Buy Gold

The Fed is doing a favor to those who pay attention not only to what the Fed says, but also what the Fed does. Despite the fact many Fed officials, including the top policymakers William Dudley, Janet Yellen, and Ben Bernanke, have indicated that a new printing program might be on the horizon, no official announcement has arrived. With little attention being paid to the Fed’s new money printing schemes, gold investors can purchase the metal before the general market rushes in after fleeing the dollar. Gold is trading at reasonable levels now, given the pullback in Q4 of 2011, and is now back in line with its historical exponential trend line, and metal’s value is especially true with new news that QE3 is already underway:

By Jeff Clark, Casey Research

Some investors are frustrated and a few are worried that gold seems stuck in a rut. This stall in price has happened before, of course, but since 2001 it’s always eventually powered to a new high. Unless one thinks the gold bull market is over, it’s natural to wonder how long might we have to wait before seeing another new high.

Absent some sort of global shock that sparks another rush into gold (easily possible in today’s climate), I think the answer may lie in examining the size and length of past corrections and how long it took gold to reach new highs afterward.

It makes sense that big corrections would take longer to reach new highs than small ones, but I wanted to confirm that assumption with the data. I also wanted to determine if there were any patterns in past recoveries that would give us some clues that we can apply to today.

Gold set a record on September 5 at $1,895 an ounce (London PM Fix) and to date has fallen as low as $1,531 (December 29), a decline of 19.2%. In o

rder to determine how long it might take to breach $1,895 again, I measured how long it took new highs to be mounted after big corrections in the past.

The following chart details three large corrections since 2001, and calculates how many weeks it took the gold price to a) breach the old high, and b) stay above that level.

(Click on image to enlarge)

As you can see, it took a significant amount of time for gold to forge new highs after big selloffs. And yes, the bigger the correction, the longer it took.

In 2006, after a total fall of 22.6%, it took a year and four months for gold to surpass its old high. After the 2008 meltdown, it was a year and six months later before gold hit a new record.

Our recent correction more closely resembles the one in 2003. After a 16.2% drop, gold matched the old high seven months later. It took another two months to stay above it.

So when do we reach a new high in the gold price?

Let’s apply the same ratio from the 2003 correction and recovery: If it took 29 weeks and four days to reach a new high after a 16.2% correction, a 19.2% pullback would take 35 weeks and 0 days. That works out to Monday, May 7, 2012.

An exact date is pure conjecture, of course. On one hand, gold could drop below the $1,531 low if the need for cash and liquidity forces large investors to resume selling. On the other hand, Europe and/or the US could resume money printing on a large scale and send gold soaring overnight. The point of the data is that it signals we shouldn’t be too surprised if we don’t hit $1,900 for another four months yet. And if it takes another two months or so to stay above it.

Think that’s too long? There are some important reasons to not let it discourage you…

Once gold breaches its old high, you’ll probably never be able to buy it at current prices again.

That’s a rather obvious statement, but let it sink in. Buying now at $1,600 and then watching the price fall to, say, $1,500, wouldn’t be fun – but it’ll probably hit $2,000 or higher before the year’s over, never to visit the $1,600s again this cycle. If that turns out to be correct, the next four months will be the very last time you can buy at these levels. You’ll have to pay a higher price from then on.

Look at it this way: If the “rebound ratio” is similar to the one in 2003, you have four months and counting to buy whatever gold you want before it’s no longer on sale. It’s entirely possible that by this time next year you will never again be able to buy gold for less than $2,000 an ounce – unless maybe it’s in “new dollars” or some other currency that circulates with fewer zeros on the notes.

The data can also help you ignore the noise about gold’s bull market being over and other nonsense spewed from mainstream media types. If gold doesn’t hit $1,900 until May, you’ll know this is simply normal price behavior and that they’re overlooking basic patterns in the data. And when September rolls around – seasonally the strongest month of the year for gold – and the price is climbing relentlessly and they’re caught off guard by it, you’ll already be positioned.

Regardless of the date, we’re confident that a new high in the gold price will come at some point, because many major currencies are unsound and overburdened with debt – and they’re all fiat and subject to government tinkering and mismanagement. Indeed, the ultimate high could be frighteningly higher than current levels. As such, we suggest taking advantage of prices that won’t be available indefinitely.

After all, you don’t want to be left without enough of nature’s cure for man’s monetary ills.

[Traditional savings accounts simply do not cut it in today's economic environment – government-promoted robbery means they often lose money overall. Learn how you can protect your assets –and even get ahead.]