Tuesday, May 3, 2011

GREATEST PROFIT POTENTIAL OF THE LAST DECADE

After what should be a brief pause this week commodity markets will move into the greatest rally of the last decade. As usual I will stay focused on the precious metal markets. They have been the leaders during this entire move out of the `08 bottom and they will see the largest parabolic move of all commodities during the final leg up.
 
I've noted in the past that consolidation size is usually a good leading indicator of how large the following rally will be. Gold just consolidated for 5 months. That is going to produce a massive rally. It's already produced a large move and it's just started.


Gold and especially silver have already come much further than I originally expected at this stage of the game. I was looking for gold around $1650 and silver at $50 by the top of this C-wave. Silver has already reached that level and gold tagged $1575 yesterday. This has unfolded in only the first two daily cycles. The third daily cycle is where the real parabolic gains are going to occur.
The third and last daily cycle higher during the semi parabolic move in `09 added 200 points in a little over a month.

The coming parabolic move will be significantly more powerful than what happened in `09 as this will be a final C-wave move. We should easily see a 300- 350 point move in gold and it's anyone's guess as to how far silver rallies during the final parabolic finish. $65 or even $70 isn't out of the question.

Now for the downside. The final dollar collapse is also going to drive the rest of the commodity markets wildly higher. That will include the energy markets. Oil is due for a brief move down into its cycle low this week too. Once that has run it's course we will see oil soar higher, possibly even reaching the `07 high of $150.

$150 oil collapsed the global economy in `07 and the economy was in much better shape with much lower unemployment than it is now. In an environment of already high unemployment $150 oil and soaring food prices are going to drive the global economy into a recession even worse than what we suffered in `08.
 
Social conflict in the middle east and many emerging economies is going to intensify. People in depressed countries already can't buy food to feed their families, what do you think will be the response if food prices double again?

 
The world is about to pay the price for Bernanke's attempt to print prosperity and it is going to be a very steep price and cost many lives.

12 comments:

  1. I don't think anyone could contradict you at this moment. Very useful insights!
    But I have one more question. Do you think the start of the parabolic will be this week when Bernanke will speak(this thursday) or probably when the Q1 perliminary GDP is announced(last week of may)?
    Many thanks.

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  2. It's all in the nightly reports for subscribers.

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  3. Hi Toby ...I am a frequent reader of you blog....Nice forecasts....i find them quoite accurate.....Where can I leanr about cycles ...and apply them to securities I am trading??

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  4. Hi, can any one explain what is a "parabolic"

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  5. Toby, your timing could not be worse. Blood bath, margin selling...it's outright dangerous at the moment.

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  6. What's wrong with his timing? He said gold and silver would correct this week down to these levels before rising.

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  7. Do you think that this is the end of this vicious sell off?

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  8. Yes I do, or we are very close to it over the next several days. One clue is that GDX is finding strong support just above its 200 day MA. If it turns higher that would be bullish for the metals IMO.

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  9. I hope you make money. Perhaps the timing of my post is a near term bottom. I tend to get cautious yet elated near tops and downright fearful towards bottoms. Apparently I am not the only one based on todays selling stampede. Good Luck.

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  10. This is a perfect example why to do a " MARRIED PUT ". Look it up on google. I still own all my SLV shares and am sleeping like a baby.

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  11. All incorrect Silver fell belove 38 against what you mentioned in chart. Oil came to 94 against you mentioned in chart. Gold came to 1462 again you incorrect. You need to learn to see chart first. Gold silver can not run before July. Silver will find first support at 31.60 and then 28 (A-B-C) pattern.

    forget about parabolic move now......

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  12. Yes the parabolic move is off the table at this point unless the dollar quickly collapses.

    I don't think it will though. It looks like it's trying to put in the three year cycle low right here.

    Gold may make marginal new highs as the dollar tests or marginally breaks the lows.

    There will be a bounce soon as gold is extremely deep in it's daily cycle and so is oil.

    Oil may or may not make marginal new highs.

    Probably not. It may be that $112 oil was enough to tip the economy back into recession. The leading indicators are starting to roll over. Once QE ends the life support for the market and economy will be withdrawn and it should quickly start heading back down just like it did last year when QE1 ended.

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