Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Global Warming ClImate Change Mega Death Trend - 8th Apr 24
Gold Is Rallying Again, But Silver Could Get REALLY Interesting - 8th Apr 24
Media Elite Belittle Inflation Struggles of Ordinary Americans - 8th Apr 24
Profit from the Roaring AI 2020's Tech Stocks Economic Boom - 8th Apr 24
Stock Market Election Year Five Nights at Freddy's - 7th Apr 24
It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- 7th Apr 24
AI Revolution and NVDA: Why Tough Going May Be Ahead - 7th Apr 24
Hidden cost of US homeownership just saw its biggest spike in 5 years - 7th Apr 24
What Happens To Gold Price If The Fed Doesn’t Cut Rates? - 7th Apr 24
The Fed is becoming increasingly divided on interest rates - 7th Apr 24
The Evils of Paper Money Have no End - 7th Apr 24
Stock Market Presidential Election Cycle Seasonal Trend Analysis - 3rd Apr 24
Stock Market Presidential Election Cycle Seasonal Trend - 2nd Apr 24
Dow Stock Market Annual Percent Change Analysis 2024 - 2nd Apr 24
Bitcoin S&P Pattern - 31st Mar 24
S&P Stock Market Correlating Seasonal Swings - 31st Mar 24
S&P SEASONAL ANALYSIS - 31st Mar 24
Here's a Dirty Little Secret: Federal Reserve Monetary Policy Is Still Loose - 31st Mar 24
Tandem Chairman Paul Pester on Fintech, AI, and the Future of Banking in the UK - 31st Mar 24
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Oil Price Crash, Gold Price Bottom Trend Forecast 2015

Commodities / Gold and Silver 2015 Nov 30, 2014 - 06:04 PM GMT

By: Toby_Connor

Commodities

It’s time to do a follow-up to my last Golden Bottom article. We are coming down to the wire and the action on Monday after the Swiss referendum should tell us whether gold has already formed a final bear market low, or whether we have one more drop in this intermediate cycle to the $1050 level before the final bottom.

If the vote is a yes then I suspect gold will reverse all of Friday’s losses and immediately head back up confirming that we got the final bear market bottom in early November.


If however, and I think probably the more likely scenario since the consensus is the vote is going to be a no, gold continues down on Monday then the odds are we have one last lower low in the next 5-10 days that will form a final bear market bottom somewhere around the $1000- $1050 level. Gold is already moving into the latter part of its daily cycle timing band. Monday will be day 16. The average timing band for a bottom is 18-28 days. So if the bear market didn’t already bottom in early November, it’s going to bottom in the next 5-10 days.

Traders and metal investors need to prepare mentally, because unless the Swiss vote turns gold back up on Monday, then we are going to see a final intermediate, yearly, and major multiyear cycle bottom over the next 1 to 2 weeks. And as I have pointed out in the past the final move into an intermediate cycle low is always quite scary. I call it the bloodbath phase. When the move encompasses an even larger degree yearly, and in this case multiyear cycle the final selling climax is always a truly mindbending event.

I’m pretty sure the OPEC decision not to cut production has ushered in the bloodbath phase for oil and the rest of the commodity complex as they move into a final three year cycle low.

Since oil is the driver for the commodity complex the entire sector is likely to remain under pressure until oil finishes its bloodbath phase and exhausts every last bit of selling pressure.

I’ve come up with a couple of potential targets for a bottom. The first and most likely in my opinion, would be a tag of the 200 month moving average similar to what occurred in 2009.

The second, but more unlikely scenario, would be a test of the secular bull market trendline. Since we should only have 5-10 days in this bloodbath phase there probably isn’t enough time for the second scenario to play out.

Whichever way this plays out the three year cycle low is just waiting on oil to find its final bottom.

As I am writing this article the news has come out that the Swiss vote was a no, so we can probably expect gold to follow oil down into this final bloodbath phase over the next 1-2 weeks. I’m guessing that means we’re going to be treated to one of those mindbending events, and gold will drop $100-$150 in the next 5-10 days to reach the $1000- $1050 level which will complete a final bear market bottom.

Now here is the good news. A selling climax of this magnitude is going to generate a monster rally off of that final bear market bottom. As I have pointed out in the past, in order to confirm an intermediate bottom an asset has to rally far enough to break its intermediate downtrend line. So even though gold is likely to collapse over the next 1-2 weeks the initial surge off of that bear market bottom is going to be a truly amazing event as smart money floods into the sector generating one of the largest short squeezes in history.

We’ve already gotten a little taste of what is coming over the last three weeks. In what will likely turn out to be a countertrend move, the junior miner’s rallied over 30% on massive volume. Once we get the final bear market low I expect mining stocks will rally 75% to 100% in the first 2-3 months of the new bull market.

Traders should get prepared for what is likely to be a very rough 1-2 weeks. Buy some hedges if you already have long positions, and if not, prepare to jump on what will likely be the buying opportunity of the second half of this decade sometime in the next couple of weeks.

Toby Connor

Gold Scents  

    GoldScents is a financial blog focused on the analysis of the stock market and the secular gold bull market.   Subscriptions to the premium service includes a daily and weekend market update emailed to subscribers.  If you would like to be added to the email list that receives notice of new posts to GoldScents, or have questions,email Toby.

    © 2014 Copyright Toby Connor - All Rights Reserved
    Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in