The breakout was 17 years after the Dow/Gold Ratio peak, just like it did in 1982. Also, the breakout came a few years after a significant Gold peak, again just like the 70s/80s pattern depicted in the chart above.

Gold on the other hand signaled a new bull market this year when it crossed a key level:

Since 2011 it has been forming a similar pattern to one of the early 80s. However, it signaled a new bull market when it diverged from the 80s (bear pattern) by breaking higher than point 5.

There is a problem however. One of them appears to be “lying.” There is no way that both of these can be starting a new bull market. Yes, they might be able to run up together for a while, but at some point there will be major divergence.

I have written about why this is the case, on numerous occasions (recently here).

I guess we will find out soon enough who is lying? A simple but diligent application of the buy low sell high principle could probably help making this decision.

Since the question is (put in another way): who is starting a new bull market? Is it the Dow that is trading at more than 27 times its last significant high (1973 high: about $1000), or is it gold that is trading at less than its 2011 high and trading at less than double of its 1980 high (around $850)?

For more on this, and similar analysis you are welcome to subscribe to my premium service. I have also recently completed a Silver Fractal Analysis Report as well as a Gold Fractal Analysis Report.

Warm regards,

Hubert

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

http://hubertmoolman.wordpress.com/

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

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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