Gold in 2016

We all know that gold prices in US dollars have been in a downtrend for about 4.5 years.

We all know that gold prices rise, on average, as the underlying currency declines in value.  Gold in the US was priced under $21 per ounce when the Federal Reserve was established.  Since then the dollar has been devalued and gold has increased in price by a factor of about 50.

It is the same story around the world, whether you evaluate in terms of British pounds, euros, rubles, yen, or any other debt based fiat paper currency.

So what are gold prices today and what will they be in the next two years?

  1. As I write gold is priced at about $1,100, down over 40% from its all-time high but more than $50 above recent lows.
  2. Gold prices – paper gold prices established on COMEX – are oversold weekly and monthly. The next big move is likely higher.  See charts below.
  3. Global debt exceeds $200 Trillion. Central banks will borrow currencies into existence to support overspending by their governments, devalue their currencies, and do whatever they believe is necessary to support a wobbly financial system.  Expect more devaluations and higher gold prices in fiat currencies.




The vertical purple lines on the monthly chart are spaced about every 7.5 years, approximately marking lows in 1985, 1993, 2001, 2008, and 2015.  Gold prices are currently in the zone for an expected cyclic bottom.  In our central bank managed financial system, we should NOT rely upon cycles, but we should not ignore them either.

  • Cycles indicate gold prices are in the time zone for a low.
  • The purple ovals at the bottom of the monthly chart on the TDI indicator show that monthly gold prices are oversold and due for a bounce.
  • The light green ovals at the bottom of the weekly chart on the TDI indicator shows that weekly gold prices are oversold and due for a bounce.

Other Considerations:

  • After multiple promises about “no boots on the ground” the US now has boots on the ground in Iraq, Syria, and over 100 other locations. A large military is expensive and must be supported by debt, deficits, taxes, and promises.  Expect more dollar devaluation.
  • US government expenses are out of control – currently around $4 Trillion per year – and going higher. Revenues lag expenses.  Expect more debt, deficits, promises and dollar devaluation.
  • The US stock market is rolling over in its 7+ year cycle. The recession and stock market losses will hurt the economy and US government revenues.  Expect more debt, deficits, promises and dollar devaluation.
  • “Regression to the mean” suggests gold will correct higher and the S&P will correct lower. The correction in both is in process.
  • China, India, and Russia are trading dollars and bonds for gold. They want physical gold, not paper promises such as COMEX gold contracts.  They know the truth – gold thrives, paper dies.
  • Global banks have created and profited from the creation of about a $1,000 Trillion in derivatives. This has been good for bank profits and bonuses, BUT  …  what could go wrong?  Is your bank at risk?  Your pension fund?  Will physical gold and silver even be available to buy when it becomes devastatingly clear in 2016 – 2017 that we need it as insurance and as a store of value to protect from devaluing fiat currencies? 

Gold Valuation Model:

Harry Dent thinks gold prices may drop to $250.  In a hyperinflation, gold prices could easily exceed $10,000.  What should we believe?  My solution was to create a valuation (not a timing model) model for gold prices, which I published over a year ago.  Since 1971, using moving-average smoothed prices, the valuation model had a 98% statistical correlation with actual smoothed gold prices.  The model tells us that a “fair” value for gold in 2015 is $1,200 – $1,300.  Gold prices on COMEX are too low today.

The model is based on US national debt (massive and exponentially increasing), the S&P 500 Index (rolling over) and the price of crude oil (bottoming – I think).  The model indicates gold prices should be valued much higher in the next several years — UNLESS you think national debt will flat-line or decrease, the S&P 500 will rally much higher, and crude oil prices will stay at currently depressed levels for several more years.


  • Gold prices are in the time zone for a 7 year bottom. Buy for insurance.
  • Gold prices are oversold on a weekly and monthly basis and indicate higher prices are likely. Buy for insurance.
  • The financial world is more unstable and dangerous each day. War is escalating globally.  Economies are rolling over into recession.  Derivatives …. much could go wrong.  Buy gold for insurance.
  • Central banks will devalue their currencies as certainly as the sun will rise and politicians will make promises they do not intend to keep. Buy gold for insurance.
  • My gold valuation model indicates gold prices are too low.
  • Gold (and silver) are insurance to protect from devaluing currencies, central bank manipulations, deficit spending, massive unpayable debt, and politicians pushing their countries into expanded wars. We need such insurance.

Gold thrives, paper dies!


Worth Reading:

Andy Hoffman:   PBOC Loses Control

Dave Kranzler:   The Federal Reserve’s Salvation Army School of Economics

David Stockman:   Safe on the Sidelines

Bill Holter:   Why Would He Say This?

David Harrith:   Fed Official Confesses


Gary Christenson

The Deviant Investor

My books are available on Amazon and at

5 thoughts on “Gold in 2016

  1. The oil implosion is now upon us and is likely to be far greater than what we experienced in the sub prime crisis. This implosion will bring about a world economic depression of unequaled proportions, a singularity in financial history. Banks and the price of oil are now systemically coupled, the unintended
    consequences of “cooking the books” in the bank loans has prompted an increase in financial instability. The Federal Reserve is now involved in tricks of legerdemain while the Plunge Protection Team is impotent.
    These are just some of the comments of the financial plight that we contemplate this morning.

  2. Several sources indicate that worldwide SHIPPING has almost ground to a halt!
    This is a very dangerous red flag. Economies are on decline, interest rates are falling – soon into negative territory – fiat currencies are also on the chopping block.
    2016 will be a historic year for most people – take refuge in physical gold & silver!
    Black Swans are increasing in number unfortunately.

    • A further fuller reference re worldwide SHIPPING crisis is as follows:

      Shipping Said to Have Ceased… Is the Worldwide Economy Grinding to a Halt?
      By: Jeff_Berwick
      Jan 12, 2016

      Last week, I received news from a contact who is friends with one of
      the biggest billionaire shipping families in the world. He told me
      they had no ships at sea right now, because operating them meant
      running at a loss.

      This weekend, reports are circulating saying much the same thing: The
      North Atlantic has little or no cargo ships traveling in its waters.
      Instead, they are anchored. Unmoving. Empty.

      Commerce between Europe and North America has literally come to a
      halt. For the first time in known history, not one cargo ship is
      in-transit in the North Atlantic between Europe and North America. All
      of them (hundreds) are either anchored offshore or in-port. NOTHING is

      This has never happened before. It is a horrific economic sign;
      proof that commerce is literally stopped.

      We checked and it appears to show no ships in transit
      anywhere in the world. We aren’t experts on shipping, however, so if
      you have a better site or source to track this apparent phenomenon,
      please let us know.

      We also checked, and it seemed to show the same
      thing. Not a ship in transit…

      If true, this would be catastrophic for world trade. Even if it’s not
      true, shipping is still nearly dead in the water according to other
      indices. The Baltic Dry Index, an assessment of the price of moving
      major raw materials by sea, was already at record all-time lows a
      month ago.

      The storm has been building for some time, actually. Not so long ago,
      there was a spate of reports that the world’s automobile manufacturers
      were in trouble because cars were not selling and shipments were
      backing up around the world.

      ZeroHedge reported on it this way:

      “In the past several years, one of the topics covered in detail on
      these pages has been the surge in such gimmicks designed to disguise
      lack of demand and end customer sales, used extensively by US
      automotive manufacturers, better known as “channel stuffing”, of which
      General Motors is particularly guilty and whose inventory at dealer
      lots just hit a new record high.”

      It’s no coincidence that China is struggling desperately to contain a
      stock implosion. Reportedly, banks have been told they are forbidden
      to buy US dollars and numerous Chinese billionaires have gone missing.
      And the markets have just opened on Monday and are again deeply in the

  3. Gary — it seems like the mortar between the bricks of the Fraudulent Manipulative HOUSE are starting to dissolve – some form of collapse is inevitable. Fiat dollar will weaken further. Canada may have to lower interest rates again next Wednesday. Debt levels are soaring everywhere. Q.E. 4 nows seems the future temporary fix. Crazy Glue for the house won’t work. Chinese economy weakening too.

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