GOLD: then and now

As the saying goes; “History often repeats, but is never exactly the same.” The same can be said for asset classes, if one understands their long term cycles. Let’s examine Gold.


From 1970-1980 Gold entered its first real bull market, in USD terms, rising from $35 to $873. It then entered a 21 year bear market bottoming at $256 in 2001. Both the bull and bear markets left behind certain characteristics. From 2001-2011 Gold had its second bull market, rising from $256 to $1924. In percentage terms it was not as great as the first. But in USD terms it was nearly twice as large.


After analyzing the 21 year bear market, 1980-2001, in OEW terms. We determined its bear market pattern. It was basically a double three, abc-x-abc, with the second abc taking up most of the time. The first abc was only five years in duration: 1980-1985. Notice, however, the two best bear market rallies were the first B wave and the X wave. They both retraced about 38.2% of the associated previous decline.

Normally we do not attempt to trade in bear markets. They sometimes can become like bottomless pits. Many of the Gold bulls are probably feeling that way now. However, we did find something quite striking when reviewing the first A wave of the previous bear market: 1980-1982; and the current A wave of this bear market: 2011-2013.

Gold 1980-1982

During 1980-1982, Primary A took 29 months, and declined in basically three Major waves: $463-$749-$298. Currently, Primary A has taken 27 months, and has declined in basically three Major waves: $1524-$1798-$1179 thus far. On the surface it does not appear to be much, except the time factor is quite similar. But let’s put the declines side by side.

1980-1982: Major A $410, Major B $285 and Major C $450, for a total decline of $575.

2011-2013: Major A $400, Major B $270 and Major C $670, for a total decline of $750.

Gold 2011-2014

Notice both Primary A waves are quite similar, in time and price. Our Primary A wave count suggests Gold may have recently bottomed in December. We have a completed Major A @ $1524, a completed Major B @ $1798, and potentially a completed Major C @ $1181 at the December low. Should this be correct we could now witness a 38.2% retracement of the entire first decline, ($1924-$1179), into the $1460 area over the next 3-8 months. This would represent a $280 rise. Which is also similar to the $220+ rises of Primary B and Primary X during the last bear market. “History often repeats, but is never exactly the same.”

You can follow Gold along with us using this link: Have a healthy and prosperous New Year!

About tony caldaro

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26 Responses to GOLD: then and now

  1. thanks tony, i am not much of a metals trader -if at all-, but if gold bottomed, do you think mining-company stocks will do well? I am namely seeing some real bottom feeders (GSS) and some starting to perk of their base (MCP, REE).

  2. blackjak100 says:

    Thanks for the analysis tony! Funny how we arrived at similar price targets via different methods. A target of $1460 represents a nice 3-3-5 structure from the June 2013 low before heading towards $1000. I plan to remain long at least until $1350.

  3. M1 says:

    Tony, in my honest opinion this gold price correction on this chart looks like the one we can see on the spx monthly chart during the 1987 major 4 correction.
    You may be underestimating the amount of paper the FED can print in the next years.
    Gold Supercycle wave 3 unfolding ??

    • M1 says:

      35 to 873 = 838
      2.62 times 838 = 2195
      2195 + 256 = 2451 (First target).
      4.62 times 838 = 3871
      3871 + 256 = 4127 next…..

  4. uncle10 says:

    Thanks Tony. Gold is interesting to think about. Good example of why anything is “valued” as it is.
    I like buffets statement, “Gold gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head”.

  5. torehund says:

    Worst case scenario from top is an abc (A)- B- abc (B), D is finished and its working on a E…
    As there are other bullish market options abound I for now have chosen not to enter gold nor the miners, due to the fear or a deep E…well if gold chooses to count the double abc down and the D is really a wave one then I am game on..if its a deep 2 bottom we are staring at right now(if it holds).
    Tony, thanks for the gold update.

  6. CygnetNoir says:

    Nice analysis, Tony. Price action at the December lows certainly looked like a trade-able bottom, and seeing your OEW analysis here certainly has me wishing I had bought twice as much on 12/20 as I did. I think the saying that might work best here in your gold report is Mark Twain’s observation that “History does not repeat itself, but it does rhyme.” 🙂 Your numbers between the two bear markets are not the same, but they sure do sound alike, i.e. rhyme with one another.

    As always Tony, you put out another piece of first class work – which is why you are in a class by yourself. Thank you!

  7. scorp100 says:

    Thank you, Tony. HNY.

  8. mcmasoniam says:

    Excellent report Tony. Thank you!

  9. gary61b says:

    TY Tony, very interesting. I am thinking gold will turn back down as soon as this correction we r in is complete ( minor 2). I think QE and the distortions it has manifested in price and duration in the overall market, might challenge the correlation of golds history to the present. Just an opinion.

  10. mike7x says:

    Silver should do well during the 3-8 month time-frame mentioned and may very well outperform gold.

  11. attitude928 says:

    Thanks. Do the gold miners retrace as well?

  12. attitude928 says:

    Interesting analysis Tony. Thank you. So which do you expect to go up more during the gold retracement time period, the DOW or gold?

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