Well, after a few days of wrestling with Microsoft Office 2016 blowing up after a Windows 10 update, finally have a moment to post a chart and then get back to producing some probable price ranges and closes.

There is an almost insane amount of symmetry between the 1980 gold high and the 2011 top. Somehow there are some who still believe that the price decline from 2011 to present is some little blip similar to the 1970's declines before the big price run higher.

The cliche is that anything is possible. Cliche and not very precise. The above chart is squared to the $100.00 low back in 1976.

The gold market isn't even necessarily a case of what is past is prologue. Prices, along with everything else, simply move in cycles. Then there is the fallacy of linear thinking compounded by charts based on two dimensions.

Growth in nature is multi-dimensional and frequently occurs in multiples of 1.618. That linear thinking, coupled with the natural optimism of the human species, often results in analysis biased towards never-ending linear growth. Why would price move backwards when it can just follow a straight line moving up, up, and up?

But, what spirals up can spiral down. There are explosions of growth followed by massive declines all the time in nature. You could ask the dinosaurs or the Dodos, but they already caught the last spiral out of here (or maybe it was a mortal coil...).

So, linear thinking only goes so far in a multi-dimensional world and universe where everything is tumbling, spinning and hurtling through an unknown medium. Luckily, you don't need to think or even see in three or more dimensions to gain a grasp on what is going on.

One basic principle, often attributed to Alan Andrews, is Action-Reaction. Whether it's "for every action..." or "one step forward, two back", or the opposite, we often experience "reversion to the mean" in life. For some of us that mean reversion has been brutal. Markets, economies, and prices are ruled by Action-Reaction.

At the root of Action-Reaction is pure mathematics (coupled with mass psychology), and the math behind it is embedded into symbols that have evolved from pagan times down to the Ichthys you see on the trunk of the car you're following in bumper to bumper traffic.

Source / License

Source / License

If you don't see the similarity between the above two images, then tilt your head to the side like the RCA Victor Dog. If you understood that reference you just dated yourself...badly.

Prices keep intersecting each other - whether it's filling the gap or the highs reversing and eventually seeking out an old high - something that one can make the case for in the above chart.

Let's shift gears to some chart nuts and bolts. Straight lines, beautifully and arbitrarily drawn to fit our biases look lovely on charts until they stop working. So, we take the bias out of the chart. As said earlier, the chart is squared to the 1976 low of $100.00. Equally, the chart could be squared at zero or the all time high. However, for comparison the 1976 low was a good starting point. Why? Well, we get to draw some lines that are useful and valid across five decades.

The light blue line is a Pitchfan (combination pitchfork and Gann Fan). So what? Well, pitchforks and Gann Fans work because they visually show price action-reaction. That light blue line where the gold price bounced a few years after the 1980 top intersects the current gold market and may be marking out a head, and potentially a right shoulder. If the pattern is valid then the current move up would be the last gasp before a substantial decline.

The darker blue Pitchfan line provided support for much of the 1980's for the gold price. Once it was broken, however, the yellow metal slithered lower. That same line may have marked the left shoulder of the possible head and shoulders pattern that is taking shape. If the gold price breaks below this line, it's highly probable it drops below $1,000.00, perhaps substantially lower. How much lower? There is a good chance price presses down to the 1980 high which (at least on this chart) is showing around $873.00.

Another line to consider is the 45 degree line which splits 1970's to 1980 bull market in two. Now look at the current market. It hasn't come close to touching the line, but action-reaction would imply that, at a minimum, the gold price ought to test the line if not break it. Again, that puts $1,000.00 or significantly below a grand in play.

Below the red 45 degree line is a black line that is 34 degrees. It's not exact due to limitations of the site it was created on - it should be 33.75 degrees. Why 33.75 or 34 degrees? W.D. Gann's angles show that spiral growth we discussed earlier in a clear, visual manner. 45 degrees can be usefully divided into eights or 5.625 degrees. Those multiples of 5.625 can, over extended periods of time, define support and resistance. For gold, 34 degrees tends to be one of the useful angles. For other commodities, stocks or stock indexes, etc., the useful angles might not be the same.

Again, some of you are thinking, "So what!?!" So, if you are attempting to compare two gold bull markets spaced over 30-years apart, with prices that spiral higher based on 1.618, angled lines drawn from the same base ($100.00) allow you to do that. A Pitchfan line that was support or resistance in the 1970's or 1980's can become a support or resistance line again in the 2000's, twenty teens and beyond.

In the 1980's the gold price fell below both the 45 and 34 degree lines. It hasn't yet fallen below either in the current one. Does it have to? It almost certainly has to happen eventually due to action-reaction. When that will happen is not something we're going to speculate on here.

If we compare the 1970's to 1980 bull market with the present market, it appears probable that price should fall below the red 45 degree line, the black 34 degree angle, and perhaps to the lighter blue line seen exiting the chart around $600.00. We should consider the possibility that the gold price could fall all the way to the red line - where it fell below that level in the 1990's and 2000's before launching into the bull market peaking in 2011.

There's nothing that says the gold price has to decline that far to near or sub-$500.00. There's nothing that says it won't either.

Over the years we have heard a lot of arguments that the gold price has to go higher. That gold has to go higher, or lower, isn't in dispute. Very often the reasoning, based on "fundamental analysis" is faulty. Drinking a beer and shooting the breeze about when the dollar is going to crash and burn can be great fun. However, great fun doesn't lead directly to a useful and durable analysis of price movements with it's seemingly indecipherable zigs and zags.

If we can, however briefly, take a step back from linear thinking, bias, and constantly reaching for a headline-based cause for every little squiggle in the price line, then there is the possibility that we can begin to see the larger pattern and cycle unfolding before our eyes. If we can momentarily set aside the well-known fact that every price chart must not have "too many" lines, "too many" colors or, heaven forbid, straight lines that only an all knowing technical analyst can draw by prettily connecting only the most important prices together to show what ought to be obvious, but mysteriously is only known by the person who created the chart.

If we will, just for a passing moment, break free from the two-dimensional thinking that rules analysis, where every movement owes to the weirdly irresistible FedSpeak uttered by Janet Yellen, and consider that there may be something deeper going on here. What if price movements are based on cycles? What if there is an underlying mathematics that defines much of what we're seeing when we look at a price chart? What if that Ichthys staring at us from the trunk of the car ahead of us in traffic is saying something not just about the afterlife but contains important information that can be applied in this life as well? What if the truth is outside of the neatly drawn lines and dimension where we've been told the truth is? What if we just dared to look?

Footnote: What about the master in the title? No, we're not walking around referring to ourselves as gold masters or action-reaction masters of the universe. It's simply that we have named the gold chart featured in this post the Gold Master Chart. It's the big picture view of the gold market that has shaped our view on where the market is headed for the past several years. Perhaps too, there is another Master that has provided His understanding that is beyond our poor words.