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 A Picture is Worth
a Thousand Words
Mary Anne & Pamela Aden
The Aden Sisters
Posted February 19, 2004
Courtesy
of www.adenforecast.com
This time we've decided to
take an interesting look at more charts, focusing on the big
picture for the metals. A picture is worth a thousand words and
we think these pictures tell a good story.
Gold rising in all
currencies
To begin, Chart
1 tells a great story because it shows gold's been rising
around the world since 1999. Gold shot up in euro terms early
on and even though the euro and yen have been strong this past
year, gold in euro, yen or dollar terms has risen about the same
compared to where it started in 1999.
This is important because this
is the basis for a sustained rise in gold. Gold is the ultimate
currency and we believe it's just a matter of time before gold
clearly breaks to new highs in all of the major currencies. When
that happens, gold will begin attracting a lot of attention internationally,
which will help fuel gold's bull market and drive the price even
higher.
Gold's Big Picture
Moving along, you can see gold
since 1967 on Chart
2. Ever since gold's been trading in the free market,
it's formed an important bottom about every eight years. And
each low was followed by a rise lasting 3 to 5 years. The last
major low occurred in February 2001, and gold's been rising since
then, breaking clearly above a 22 year downtrend, which was very
bullish.
This rise has proven to have
more power than the rises in the 1980s and 1990s, as it's broken
above two previous peaks, which is something gold hasn't done
since the surging 1970s. Granted, the rise to date has risen
about the same distance as the 1985-87 rise. But the power behind
the rise, the complex world we live in today, together with growing
demand far surpass even the inflationary 1970s.
This means the current bull
market is poised to last longer, closer to the five year mark
and 2006 could be the likely year we see a peak similar to the
peak in 1974. Then a decline could occur, like the one in 1976,
in say 2008-09, which would coincide with the eight year cyclical
bottom pattern. And after that, a renewed super bull market could
take place.
SILVER BETTER THAN
GOLD
Silver has the characteristic
of being a sleeper, but when it wakes up, it quickly makes up
for lost time. This has again proven to be the case.
Silver has been quietly bottoming
since 2001. It popped up last November, gaining 34% in about
two months. Chart
3A shows silver, as well as silver compared to gold below
since 1982. Silver's been moving in a gradually rising upchannel
since 1990, breaking fanlines along the way. Fanline 3 was broken
in recent months as silver shot up to near the top of the channel.
This is very bullish action More impressive, silver is now outperforming
gold for the first time since 1997, as the ratio surged above
its moving average (see Chart
3B). This is important because the ratio has now confirmed
a massive upchannel since 1987. This tell us silver is poised
to outperform gold this year and the percentage gains will likely
be greater in silver. Once the ratio rises into the "silver
surge zone," silver could explode upward since it would
also be breaking out of a bigger trend.
PLATINUM & PALLADIUM:
Changing places
Platinum and palladium have
been moving in opposite directions for the last three years,
but that's no longer the case.
Palladium is now turning bullish
for the first time since 2001 (see Chart
4A). Its leading (long-term) indicator is also bottoming
in an extreme low area, last seen in 1982 (see Chart
4B). This strongly suggests palladium is at a major bottom,
which precedes strong price rises. The bottom line is, palladium
is a unique "screaming buy" opportunity. It'll now
stay bullish above $210 and it could rise to its first target
level at the $300 to $400 level.
Palladium is very rare and
industrial demand is expected to increase, especially considering
the extreme price difference compared to platinum. Palladium
was nearly double the price of platinum in 2000 while it's only
about one fourth of platinum's price today.
WHAT TO DO
We recommend buying all of
these metals, as well as gold and silver shares. So far, the
downward corrections in these markets have been mild and they're
again showing renewed strength, or at least holding firm, which
is a good sign.
The U.S. dollar is hitting
new lows and this alone should continue to give these markets
a boost.
Plus, the industrialization
of China is having an enormous impact on gold, oil and many commodities.
We believe this mega global trend will continue and it'll keep
upward pressure on these markets.
As the charts show, these are
major trends currently underway and it looks like they have much
further to go on the upside. So stay with your positions and
enjoy the ride for as long as it lasts.
--Mary Anne & Pamela
Aden
February 18, 2004
Mary Anne
& Pamela Aden are internationally known analysts and editors
of The Aden Forecast, a market newsletter providing specific
forecasts on gold, gold shares and the other major markets.
Click here
to visit their website at http://www.adenforecast.com/
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321gold Inc Miami USA
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