This is a quick real time assessment as to where we are in the bear market for PMs. As I have previously stated we entered phase III last fall with the October breakdown. Phase III has proven to be unusually deceptive, as it nested right under the S&R line for 8 months as it built out a H&S pattern. It has now begun its impulse downward and is fully expressing itself on the down side. So the question is where to from here?
No one can know, however my best estimate based on years of observing market panics is we are midway into a possible 5 day crash sequence. Lets review some principles from the book “Panic Profits”: The structure of panic… expect 4 days of hard panic, but crisis conditions may last longer. Maybe 2 days then one day of sideways action followed by a second attack. The next to last day is often the most frightening. Panics are different than bear market endings as bears often expire quietly and their end is little noted.
Here is the dynamic governing the gold bugs mind right now: investors suffer a psychological block that it is too late to sell their stocks. The fear of getting out at just the wrong time overcomes the fear of a further slump—at least until the pain becomes too unbearable as in Sept 1974 or May 1970. Soon they will purge themselves.
I am keeping this short, however my best guess and it is only a guess, but based on prior bears is today is the day we go sideways but the decline is not yet over. One or two more days of purge then we can enter a countercyclical move. Once that move is over then we enter the final crash phase that will be known for generations