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Tuesday, January 10, 2012

Blow Off Top In Gold Will Stick Out Like A Sore Thumb

The last three tops in gold, often implied as unstable parabolic moves by the headlines, have been declining in intensity since 2006. Even 2006's 4.15 sigma up thrust takes on an appearance of a mere speed bump relative 1980's mountainous, 5.61 sigma advance. November 2.80 sigma peak, which has many screaming top even louder than 2006, looks exceptional tame. A blow off top in gold is coming. It's sigma reading will exceed that of 1980.01 and will stick out like a sore thumb on the long-term gold chart (see chart 1).

Date, ZScores, Avg Monthly Gold Price
1980.01, 5.61, 675.3

2006.05, 4.15, 675.39
2008.03, 3.32, 968.43
2011.09, 2.80, 1771.88

Chart 1: Gold, London P.M. Fixed (Gold) and Z Scores of Secular Trends

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