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Profit Confidential (www.ProfitConfidential.com) an e-letter of Lombardi Publishing Corporation, a 29-year-old consumer publisher that has served over one million customers in 141 countries, is weighing in on how two key ratios point to a bottom in gold prices and suggesting higher prices.“Gold prices have been under serious pressure over the last number of years, and at $1,145 an ounce, gold has lost more than 30% of its value since the beginning of 2013. However, that may be about to change,” says economist and lead contributor Michael Lombardi. “There are two indicators to closely follow to gauge where gold prices are headed, and right now, they are saying the bottom is in for gold and that higher prices are in the cards.”
Lombardi explains that the first indicator is the ratio of the price of gold to the price of crude oil, often referred to as the gold-to-oil multiple. Over the last 20 years, each time the gold-to-oil multiple topped 24, gold prices went much higher. In 1999, gold prices started a long, steady upward trend from $300 an ounce. In 2009, the gold-to-oil multiple again rose to over 24; gold prices subsequently hit a record high near $1,900. Today, the gold-to-oil price multiple is again over 24. Using history as a gauge, this indicator points to gold prices rising sharply higher.
Another indicator that suggests gold prices may have bottomed is the gold-to-silver multiple. This multiple displays how many ounces of silver it takes to purchase an ounce of gold at current market prices. At current prices, the number of ounces of silver it now takes to buy one ounce of gold is close to the same historical level where, when reached, gold prices moved sharply higher.
“That figure is 74, and whenever it takes more than 74 ounces of silver to buy one ounce of gold, gold prices subsequently move sharply higher. It happened in 2003, it happened in 2009, and that number is here again today,” Lombardi concludes. “These two historically proven indicators of future gold prices, the gold-to-oil and gold-to-silver multiples, are giving credence to a forecast for sharply higher gold prices ahead. We at Profit Confidential see the depressed stock prices of major gold mining producers as a bargain at current levels.”
For more information on Profit Confidential, visit www.ProfitConfidential.com.
Founded in 1986, Lombardi Publishing Corporation, which has served over one million customers in 141 countries, is one of the largest consumer information publishers in the world. For more information on Lombardi Publishing Corporation, visit www.LombardiPublishing.com.
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