Thursday, April 28, 2016 1:33 AM EST
As suggested in our previous analysis, we need to see a couple of things happening in order to welcome a potential new bull market:
#1. COT data to return to bull market values.
#2. Gold price to exceed the 2015 high at $1,302.
Nobody can predict when this will happen, but we can prepare by looking at the past bull and bear markets so that we can recognize a new bull market if and when it materializes.
The bear market from 1981 to 2001
After topping above $700 in 1981, gold lost more than half of its value in just over a year, followed by two sharp bear market rallies, and then died a slow death over the next 12 years.
Gold stocks as represented by XAU had two bear market rallies during that 20-year bear market, with both rallies gaining over 100%.
The bull market from 2001
The bull market in gold, which began in 2001, did not start with a price spike. In fact, rallies were followed by sharp pullbacks and multi-month consolidations, which are signatures of a bull market.
Gold stocks as represented by HUI did the same. In fact, the initial rally gained about 100% and was followed by a multi-month consolidation. And this same pattern went on continuously throughout the bull market.
The gold market now
So far we have a 20% price spike in gold, with no correction/consolidation yet.
Gold stocks as represented by HUI have spiked up 100% with no pullback.
Summary
- If we are in a new bull market, prices in both gold and gold stocks should begin to pull back and consolidate soon.
- If we are still in a bear market, then prices can push somewhat higher, followed by a sharp decline, losing all of its gain or more.
- I remain patient and wait for the market to tip its hand.
Disclosure:
1) Patrice Fusillo conducted this interview for Streetwise Reports LLC and ...
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Disclosure:
1) Patrice Fusillo conducted this interview for Streetwise Reports LLC and provides services to Streetwise Reports as an employee. She owns, or her family owns, shares of the following companies mentioned in this interview: None.
2) The following companies mentioned in the interview are sponsors of Streetwise Reports: Red Eagle Mining Corp. and Rye Patch Gold Corp. The companies mentioned in this interview were not involved in any aspect of the interview preparation or post-interview editing so the expert could speak independently about the sector. Streetwise Reports does not accept stock in exchange for its services. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Barry Allan: I own, or my family owns, shares of the following companies mentioned in this interview: None. I personally am, or my family is, paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: None. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I determined and had final say over which companies would be included in the interview based on my research, understanding of the sector and interview theme. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.
4) Ryan Hanley: I own, or my family owns, shares of the following companies mentioned in this interview: None. I personally am, or my family is, paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: None. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I determined and had final say over which companies would be included in the interview based on my research, understanding of the sector and interview theme. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.
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I keep waiting for the rug to get pulled on the mining stocks. I'm open minded about where gold and the miners go from here, but I still don't trust this rally. I feel like my view is somewhere halfway between Peter Schiff on one hand, and Harry Dent on the other. I'll maintain a small position in the miners, yet be ready at a moment's notice to sell if need be.
Same here.