Gold fell again last week and stayed within our forecast channel. In our considered opinion we are having a short-term bounce to relieve some of the oversold conditions from last month’s extreme drop. Our long awaited fall to lower lows seems finally to be underway. However, as usual with gold a small bounce is being touted as the bottom. It is worth remembering that the gold price made a multiyear low on a closing basis last month, which is not something that should be ignored.
We have spent most of this year warning our followers that lower lows were coming and that we were in a bear market consolidation and that this would then continue down later in the year. Now as we stand with the end of year in sight we expect to see a final plunge lower at some point soon we had hoped it would be by the year end but possibly the end of January looks favourite at the moment.
This current bounce so far has been a little weaker than we expected we wouldn’t have been surprised if $1100 had been reached and although it is still possible it is less likely. Maybe finally the bulls are running out of steam a vital component of a sustainable and long term bottom.
Another vital component of a long term bottom would be a general build up of short positions over the next few weeks; a meaningful low would be reached by a climax of sellers and negativity followed by a rocket launch as the short sellers re buy and start the next leg of the bull market.
We are still gold bulls over the long term and expect a new bullish leg to begin in the next few months, our long term forecasts show that we have most likely just been consolidating the gains made from 2000 to 2011. Nothing can keep going up year after year forever, all bull markets have periods of retracement and consolidation it is a natural pattern within any market or natural system.
Looking at the levels of gold ownership across the west and the role it plays in most investment portfolios we have always felt that it has been significantly under owned. The gold price would have to move significantly higher if the levels of ownership from the 1960’s and 1970’s were replicated today whilst we don’t expect the same levels of ownership as in the past we do expect market participants to increase their ownership of gold during the next phase.
Having said all of the above what we expect and what happens can be two completely different things that’s why we create forecasts and analyse the market in the way we do so instead of leaving things to chance we actually model what gold or other markets are doing and not what we would like them to do.
As the negativity in gold accelerates and many of the long term bulls capitulate we will be altering our outlook to be more positive and will be looking for signs that indicate a good price structure for a sustainable and definitive low.
During the last year we have consistently forecast lower gold prices we have never deviated from this long term position. All our analysis has shown that we spent the last two years in a bear market consolidation and we are now continuing the bear market that began in 2013, unusually for most analysts you can see our track record right on our front page.
We now create forecasts for a wide range of markets, stocks, forex, interest rates and energy along with gold using our unique forecasting logic that has kept our followers on the right side of the gold market for so long