Precious Metals Bull Analogs Update

by Jordan Roy-Byrne, CMT
The Daily Gold

We started employing analog charts during the latter stages of the seemingly forever bear market in precious metals. Comparing current to past trends by using price data is not considered technical analysis but it is extremely valuable because history tends to repeat itself. It also helps us identify extremes as well as opportunities. For example, in 2015 it was clear the epic bear market in gold stocks was due for a major reversal. Today, precious metals appear to be in the early innings of a cyclical bull market and the analogs suggest there is plenty of room to run to the upside.

The first chart compares the current recovery in Gold to past recoveries. In recent quarters we had anticipated a similar, explosive rebound like in 2008 and 1976. However, with 18 months of evidence we can now say the current rebound most resembles the rebounds that started in 1985 and 2001. Both of those rebounds imply Gold could reach $1700/oz by Q4 of 2018. However, if Gold cannot takeout the resistance around $1375 then it could end up following the path of the 1993 rebound.

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