“There appears to be no rhyme nor reason to The Rule of Seven, but is often surprisingly accurate in its predictions. It is based on the assumption that the initial leg of a new price trend reflects the potential power of the changing forces of supply and demand sufficiently to serve as a guide to the probable extent of the price move. Put another way, using the Rule of Seven, a measurement of the initial leg of the trend is all the information needed to project one or more objectives in the direction of the new trend.

Numerous test that I have made over the years have revealed that the formula for measuring upside objectives by the Rule of Seven is slightly different for downside objectives.

In an uptrend the basic formula is: Measure the size of the initial up-leg by subtracting the low price from the high; multiply that figure by seven; then divide the product by four to get the distance from the low to the first (price) objective. Subsequently, divide the product by three for the second objective, and finally by two for the third objective. Note that for each of the three objectives the respective distance figure is added to the low.”

http://stockcharts.com/h-sc/ui?s=$GOLD&p=W&st=2001-01-01&id=p64474870001&a=166097618&listNum=-2

Using the old numerical Rule of Seven method to (theoretically) forecast the how far this gold bull will run, I calculated the three future price targets, based on the following data:

Initial up-leg: 1031 - 256 = 775
Low = 256

Gold Price target # 1 = $1,612

Gold Price target # 2 = $2,061

Gold Price target # 3 = $2,968

Please be cautioned, THIS IS NOT A RECOMMENDATION TO BUY OR SELL ANY FORM OF GOLD. I am merely sharing my research reading with you. By all means go to a library to read this book, which provides many other little known TA methods. Who knows, old TA methods may be like old neckties, if one waits long enough the style comes back to be a WINNER.

Bettcha the POG will reach the area of target #1 ($1,612) within the next 12 months. OH, rest assured the rise will be rocky. But HEY, nobody ever said riding a gold bull would be like riding a rocking horse.

Nevertheless, in all cases DYODD.

Long-term SILVER forecast per THE RULE OF SEVEN

http://stockcharts.com/h-sc/ui?s=$SILVER&p=W&en=&id=p64474870001

Using the old numerical Rule of Seven method to (theoretically) forecast the how far this SILVER bull will run, I calculated the three future price targets, based on the following data:

Initial up-leg: 15.00 - 4.00 = 11.00
Low = 4.00

Gold Price target # 1 = $23.25

Gold Price target # 2 = $29.67

Gold Price target # 3 = $42.50

For those readers who would like some more details about the RULE OF 7, here it is:

http://tinyurl.com/crozvq

BUY THE DIPS