Best of the Week
Most Popular
1.The Brexit War! EU Fearing Collapse Set to Stoke Scottish Independence Proxy War - Nadeem_Walayat
2.London Terror Attack Red Herring, Real Issue is Age of Reason vs Religion - Nadeem_Walayat
3.The BrExit War, Game Theory Strategy for What UK Should Do to Win - Nadeem_Walayat
4.Goldman Sachs Backing A Copper Boom In 2017 - OilPrice_Com
5.Trump to Fire 50 US Cruise Missiles To Erase Syrian Chemical Attack Air Base, China Next? - Nadeem_Walayat
6.US Stock Market Consolidation Time - Rambus_Chartology
7.Stock Market Investors Stupid is as Stupid Goes - James_Quinn
8.Gold in Fed Interest Rate Hike Cycles- Zeal_LLC
9.The BrExit War - Britain Intelligence Super Power Covert War With the EU - Nadeem_Walayat
10.Marc Faber: Euro to Strengthen, Dollar to Weaken, Gold and Emerging Markets to Outperform - MoneyMetals
Last 7 days
EURUSD at a Critical Point in Wave Structure - 23rd Apr 17
Stock Market Grand Super Cycle Overview While SPX Correction Continues - 23rd Apr 17
Robert Prechter Talks About Elliott Waves and His New Book - 23rd Apr 17
Le Pen, Melenchon French Election Stock, Bond and Euro Markets Crash - 22nd Apr 17
Why You Are Not An Investor - 22nd Apr 17
Gold Price Upleg Momentum Building - 22nd Apr 17
Why Now Gold and Silver Precious Metals? - 22nd Apr 17
4 Maps That Signal Central Asia Is at Risk of War - 22nd Apr 17
5 Key Steps For A Comfortable Retirement From Former Wall Street Trader - 22nd Apr 17
Can Marine Le Pen Win? French Presidential Election Forecast 2017 - 21st Apr 17
Why Stock Market Investors May Soon Be In For A Rude Awakening - 21st Apr 17
Median US Household’s Wealth Has Declined by 40% Since 2007 - 21st Apr 17
Silver, Platinum and Palladium as Investments – Research Shows Diversification Benefit - 21st Apr 17
U.S. Stock Market and Gold, Post Tomahawks and MOAB - 21st Apr 17
An In Depth Look at the Precious Metals Complex - 20th Apr 17
The Real Story of China’s Strong First-Quarter Growth - 20th Apr 17
3 Types Of Life-Changing Crisis That Make You Wish You Had Some Gold - 20th Apr 17
The Truth is a Dangerous Thing - 20th Apr 17
2 Choke Points That Threaten Oil Trade Between Persian Gulf And East Asia - 20th Apr 17
Gold’s Next Downside Target Is Around $700… Even if It Breaks Up First - 19th Apr 17
SPX May be Completing its Corrective Pattern - 19th Apr 17
Silver Production Has “Huge Decline” In 2nd Largest Producer Peru - 19th Apr 17
Soothing East Asia's Nerves as Trump's Administration Reaffirms US Power in Asia-Pacific - 19th Apr 17
The Brexit War - Article 50 Triggered, General Election 2017 Called - Let the Games Begin! - 19th Apr 17
Plungers Big Trade - The Oil Short - 18th Apr 17
The Smart Money Is Piling Into Regenerative Medicine - 18th Apr 17
If You Invest In Stocks Now, Expect No More Than 3% Returns In The Next 20 Years - 18th Apr 17
Maps That Explain Wars In The Middle East And North Africa - 18th Apr 17
Theresa May Calls Snap BrExit UK General Election Capitalising on Crippled Labour Party - 18th Apr 17
Is US Economy at the Cusp of the Next Recession? or Maybe Worse? - 18th Apr 17
US Housing Market Mortgage Delinquency Rates Increase & 3X ETFs - 17th Apr 17
Trump US North Korea First Strike Smoke and Mirrors, China is the Real War Target! - 17th Apr 17
Now Is The Time To Invest In Canada’s Marijuana Boom - 17th Apr 17
History of the Post WWII Crude Oil Price From a Technical Perspective - 17th Apr 17
Stock Market Bounce Coming? - 17th Apr 17

Market Oracle FREE Newsletter

50+ Global Markets. Today's Top Opportunities. (April 12-20)

The Recent Up-Trend in Gold Price is Temporary… Overall Trend is Still Down for 2017

Commodities / Gold and Silver 2017 Jan 11, 2017 - 04:30 PM GMT

By: Harry_Dent

Commodities Twenty-two radio interviews for the new book, 10 of them live.

At this point, my voice is tired. So are gold sellers.

Gold peaked at $1,934 in September of 2011 – the last major commodity to peak in the 30-year cycle that first peaked in mid-2008.


Silver peaked in late April 2011, after retesting its dramatic bubble peak in 1980, at $48. That’s when we gave our first and biggest sell signal for gold and silver.

After gold’s peak in September 2011, its first wave down ended up in a two-year-long trading range that vacillated between $1,525 and $1,800. During that time, I warned that when gold broke below that $1,525 level it was toast… and its major crash from $1,800 in late 2012 to $1,050 in late 2015 was indeed devastating.

Well, there’s likely another wave of that magnitude starting this year… As I’ve said all along, the next major target in gold is its 2008 low of around $700. To get technical with Elliott Wave Theory, that would retest the 4th-wave correction before the largest 5th-wave bubble run into $1,934. I still see gold landing somewhere between $650 and $750 in the next year or so, likely by the end of 2017.

But we’ll only see this after a significant bounce ahead…

At the beginning of 2016, I forecast that gold was very oversold. It was at $1,050 per ounce in late 2015 and so due for a major bear market rally back up to as high as $1,400. As I said it would, gold did bounce and got to $1,373 per ounce in early July 2016, at which point I recommended selling again. Lo and behold, gold fell rapidly to $1,124 in mid-December.

Gold is now very oversold again, but on a shorter-term basis, and its due for a minor rally to around $1,250. But given how oversold it has gotten, it could even go back to a slight new high near to $1,400. That could come by mid-February or so.

We’re currently betting against gold in our model Boom & Bust portfolio, and sitting pretty on that position. To project our profits while waiting for this mini-boom, Charles Sizemore, our Portfolio Manager, instructed subscribers to increase their stop loss in case this stronger rally ensues. But if it does get to near $1,400 again, that will be an even better time to bet against gold.

In the January Leading Edge issue, I’ll look at all major markets through the lens of the smart and dumb traders at the Commitment of Traders Report (www.cotbase.com). Of the commodities it looks at, gold has a bit more bounce potential ahead than oil and copper, but not likely for long. Here’s what that looks like…



The commercial hedgers are the smaller segment – the “smart money” – because they always go against the trends to hedge.

The large speculators are the “dumb money.” They simply follow the trends up and down and are always wrong at major tops and bottoms.

Gold hit a record divergence in dumb money net long at 320,000 and the smart money net short at 340,000… more so than even at the secondary top in late 2012 before the big crash into 2013-2015.

In other words, that was a bear market bounce, as I forecast at the beginning of 2016.

Gold then dropped 250 points into mid-December and is now bouncing again after being very oversold on a shorter-term basis.

The record divergence of July has not been erased yet. That would require going back to near neutral or slightly negative on this market. Currently the dumb money is still 100,000 long and the smart money 110,000 short.

That means there is much more to come on the downside after this short-term bounce resolves itself – again, likely by mid-February.

Silver had an even larger divergence a bit later into early August and looks to have even more downside potential.

My forecast of $700 gold and $10 silver is increasingly likely by the end of this year and almost certain in the next few years.

This rally will be the last chance for gold holdouts to get out!

The ultimate downside for gold at the bottom of the 30-year commodity cycle, between early 2020 and late 2022, is $400 or lower to erase the bubble that began accelerating in 2005. For silver those targets are as low as $5.

That’s when I would start to recommend buying gold and silver again longer term, with a target of $4,000-plus for gold by 2038-2040. The next 30-year commodity cycle could be the greatest ever seen because it will be driven by the demographically growing and still-urbanizing emerging world. They’re the ones who’ll be producing and consuming most of the gold and other commodities – especially India.

Harry

http://economyandmarkets.com

Follow me on Twitter @HarryDentjr

Harry studied economics in college in the ’70s, but found it vague and inconclusive. He became so disillusioned by the state of the profession that he turned his back on it. Instead, he threw himself into the burgeoning New Science of Finance, which married economic research and market research and encompassed identifying and studying demographic trends, business cycles, consumers’ purchasing power and many, many other trends that empowered him to forecast economic and market changes.

Copyright © 2016 Harry Dent- 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.

Harry Dent Archive

© 2005-2016 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

Catching a Falling Financial Knife