Gold Price Prediction to 2011, 2012, 2013, 2014, 2015 by Steve Netwriter

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Steve Netwriter
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This is my significantly updated gold price prediction for 2011, 2012, 2013, 2014, 2015. It isn't really a prediction, but an analysis of GoldUS$ and the G5 index since 2000, with trends simply extended up to 2015.
Also, it isn't a gold price prediction, but a US$ price prediction, the cost in oz of gold of buying US dollars, and likewise, the cost in oz of gold, of buying a basket of major currencies.

This is an update to my previous article:

Gold to Oct 2011
http://neuralnetwriter.cylo42.com/node/2463

The reason for this update is explained here:

Would you trust someone who never made a mistake? What about someone who does make mistakes?
http://neuralnetwriter.cylo42.com/node/3282

in which I've explained a "small" error in the trend lines.

Hopefully these charts (which took a few hours to create), are pretty close to correct.

First a chart up to Jan 2012:

On 4th Jan 2000, GoldUS$=281.5 and the G5 index=96.32. I've used the ratio 281.5/96.32 = 2.923 to set the two y-axis scales. In this case, with the G5 index scale top being 450, I've set the GoldUS$ scale top to 2.932x450 = 1315.

So the first thing you will notice with this chart compared to the old one, is that the GoldUS$ line rises above the G5 line, showing that the US$ has lost purchasing power relative to the major currency basket.

From 2000 to late 2005, the G5 index roughly followed a 7% rend line (based on 2000).
From late 2005 to late 2008, the G5 index was "supported" by a 10.5% trend line (based on 2000).
Also I have plotted a 15.5% trend line (based on 2000), which roughly forms "resistance" to the G5 index from 2006 to now.

I have plotted a 21% trend line based on the "take off" point in Sep 2005.
I have also plotted a 200 day moving average of the G5 index, which you can see coincides with the 21% trend line now.

This chart simply extends out to 2015:

Your friendly host. You can email me here: climategate.scandal at gmail.com

I recommend buying gold and silver from BullionVault

Steve Netwriter
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Underestimating future rises

This article is an interesting read, showing how predictions based on trend lines have been consistantly wrong, underestimating future rises in GoldUS$:

http://www.granvillecooper.com/manrep_history.htm

Quote:
What this chart is telling us is that this global buying pressure is increasing with each passing year, and as long as buying pressure is increasing the gold price will continue its uptrend. There is and has been a great deal of commentary on gold at the tactical level but very little at the strategic.

Viewed from a larger perspective what I believe we are seeing is the return of gold to the asset allocation process after an absence of over a generation. This is leading to the return of gold to its historic role as money, as collateral, as the ultimate tender of debt.

Some have called for an official revaluation of gold by central banks to alleviate the strain in the global credit markets. I say gold's revaluation has been underway for ten years through the collective decisions of millions of individuals across every time zone. This will produce profound changes in the geofinancial landscape in ways very few can presently imagine.

A similar but different way of looking at things to what I have done, and possibly a convenient warning for those who might underestimate the devaluing of paper currencies.

Your friendly host. You can email me here: climategate.scandal at gmail.com

I recommend buying gold and silver from BullionVault

shuttle
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Log Scales

Hi Steve - When I used TA for trading purposes I always had a log scale for the y-axis in order to better see the actual trends. Is there any reason why you just use an arithmetic one?

Steve Netwriter
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Very good question
shuttle wrote:
Hi Steve - When I used TA for trading purposes I always had a log scale for the y-axis in order to better see the actual trends. Is there any reason why you just use an arithmetic one?

Very good question Smiling

I am often to be seen elsewhere pointing out mistakes with linear charts over long time scales.

You'll notice, and please pull me up on it if I don't, that when drawing straight lines, on any reasonably long time scale chart, I use a log axis.

In this case, I think people tend to think in linear terms, and are used to seeing that "exponential bubble".
So I'm purposely trying to make the point that 20%/year looks like that.

If the US$ loses 20% purchasing power (gets cheaper) every year, that will just continue with no end.

It's also easier with Excel Smiling

Your friendly host. You can email me here: climategate.scandal at gmail.com

I recommend buying gold and silver from BullionVault

Steve Netwriter
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Update

Since writing this article I have created my own "Gold Index". Please see this:

Announcing the Steve Netwriter Gold Currency Index Version 1 (SNGCI v1) 19th Aug 2010 A MUST READ
http://neuralnetwriter.cylo42.com/node/3303

Your friendly host. You can email me here: climategate.scandal at gmail.com

I recommend buying gold and silver from BullionVault

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