Loading ...Misplaced Certainty that this is a Bull Market in Gold
If there is one recurring theme I hear echoed daily on here is this notion that we know with some level of certainty that we are undeniably in the early periods of a long term bull market in precious metals. I’m not saying that we are not, and in fact I really like the set up here and supporting long term charts, but nobody knows where we are in the bull-bear cycle with certainty. The best we can do is try to interpret the data and place our bets so we have the best odds for success. We will only know in the rear-view mirror if our premise is correct…I don’t care if you use EW or any other form of TA, it can only be confirmed AFTER the fact.
Consider this monthly chart in gold going back to the early 80s. I bet 99% of the traders in 1982 thought with certainty that gold was resuming its bull market as prices made nearly a 38.2% bounce retrace of it’s earlier highs. Well folks, that’s exactly where we are today as well and I’m sure the sentiment is exactly the same now as back then. As you can see by my red arrows, it turned out to be a corrective move and it took gold another 18 years of wiggles and much basing before it made another run like people are expecting today. My point is not that I know the future…my point is NOBODY knows it and therefore I will continue to buy support and sell resistance, bagging profits along the way because only cash is certain.
I find it interesting that the bounce in 1982 lasted 7 months and we are also in the 7th month of the current move.
I agree, and have maintained that we do not know yet if we are in a bull market or just a corrective rally in a longer term bear.
So far however everything is doing what it should do if it is a bull. We will know one way or another once we have that first full “correction” in the metal and the stocks. We will watch what it does then. If after the correction we can exceed the previous highs that we are putting in now then we can call it a bull.
Interesting that several Elliot guys claim this is a massive A-B-C pattern. They could be right. But for now play it as if it is a bull, with a defined level you must stop out.
The bear case may include a second major deflationary down leg possibly sources from China. We watch and wait
True we can not know anything with absolute certainty. I try to have no opinions or let greed or fear sway me either way. However to play this game, we have to take a position one way or the other.
My approach to the market is as a speculator. I never get married to a position at the first sign of trouble I will cut and run. I have posted some bullish charts on Gold and Silver because they reflect my current position. If the market proves me wrong no problem. If the market changes I change with it.
In my book I lay out the numerous differences between now and then both fundamental and technical.
The biggest is that the fundamental driver for Gold, falling or negative real rates remains in play. Every secular peak in hard assets (1920, 1951, 1980) has coincided with a major change in Fed policy that resulted in dramatically rising real rates/yields. That point remains years away.
Mark, looking at gold alone, I also am not overly confident that we are out of the woods. However, looking at AEM on the monthly level, I am quite confident that it is not going to stop going up until it reaches $75 or thereabouts. It’s only at $55 now. Given its rate of ascent during the past 6 months, I feel $75 AEM translates to perhaps a gold price of 15xx.
As far as does reaching 15xx qualify the current rally as a long-term bull market? I’m not sure. The only time when I am sure is if gold can trade into the 16xx and reach 1800. Then I’ll know for sure that gold is intent on making new highs. However, this is where fundamentals like the sovereign debt crisis and pension crisis give me more confidence that gold will have a lot of support going forward.
I did neglect to mention 15xx gold does put it above the 50-month SMA, which is an important long-term resistance/support for me. As long as gold doesn’t close back below that average, I will remain bullish.
666
What Mark is saying is true.
But there is a big difference between then and now and it is that this last bear market lasted about 5 years , the bear from 80 to 82 lasted about 2 years (less than half time).
And in addition PM stocks have had probably their worst bear market ever over the last 5 years.
Anyway I will be sure that the bear market is over only when I will see gold to exceed $2000!
is it a spade or a pick? here is a simple example:
rock #32: enterprise value negative $20 million.
rock #25: enterprise value $30 million with 6 million oz gold
fully funded to production. buying gold at $5 per oz. internal rate
of return 70%.
plus 3 dozen others.
Does one really care what price of gold is doing or about to do?
Heh, Spock, please elaborate (again) the rock #’s at Spockm – I just want to be sure I’m holding (or can hold) the examples you cite.
Also, from an overall sentiment perspective, I’d make today’s parallels to March April 1977, not the early 80’s. Note that the SM crash in 1973-74 was still fresh in PPL’s memories then the PM crash 1975-1976 equating to our recent 2012-2016 phase. Again I reference the 100yr Dow/Gold Chart which does not turn on a dime when a trend takes root. PM Bull 1970 2001, Mkt tank 1973 2008, post-tank PM bull 1974-75 2009-2011, mkt stabilization efforts Oil / QE1-3, PM ‘correction’ 1975-76 2011-2015, PM resumption of trend (clearing of remaining market forces) 1977-1980 2015-???? (I foresee through 2021 minimum before DG ratio hits a new low).