Are We Or Are We Not In A New Gold Bull Market?

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

Gold Spot Price

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 and Silver Index XAU

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

Gold Spot Price

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.

NYSE.Arca Gold BUGS Index

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

Gold Spot Price

So far we have a 20% price spike in gold, with no correction/consolidation yet.

HUI Gold BUGS Index

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 ...

more
How did you like this article? Let us know so we can better customize your reading experience.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.
Or Sign in with
Louis Jackson 8 years ago Member's comment

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.

Ayelet Wolf 8 years ago Member's comment

Same here.