I spent much of last night and most of this morning looking for clues and guidance in the gold chart. I think I came up with a theory worth mentioning.

My theory proposes that the election distorted the gold cycle out of the October 7th low and that this may be the final drop into an intermediate cycle low. Remember, the one-more-drop I was calling for throughout October? It may still be alive.

After the drop to the October 7th $1,243 low, I expected one-more-drop to complete the intermediate cycle decline. This would have been the 5th and final common low of the larger degree 6-month cycle. Unfortunately, prices rallied out of the October low much longer and higher than they should have and I was forced to abandoned the one-more-drop theory.

-GOLD CHART FROM 10/08/2016 NEWSLETTER-

(Click on image to enlarge)

The entire move out of the $1,243 low has troubled me. Its behavior was abnormal, to say the least, and didn’t follow traditional cycle parameters.

I believe pre-election jitters severely distorted the cycle beyond normal patterns. The malformation of the cycle may have merely postponed my original interpretation. Therefore, it’s possible the “one-more-drop” scenario painted in October is still possible.

-GOLD CHART NOW- Pre-election jitters possibly distorted and extended the cycle beyond normal parameters. Theoretically, postponing the final drop into an intermediate cycle low by about two weeks.

(Click on image to enlarge)

If my assumption is correct, then metals and miners are making the final drop into an intermediate cycle low as we speak, and we could see a bottom relatively soon. I will be looking for evidence of a price reversal and bottoming pattern. Gold staying above the $1,200 level this week will lend significant credibility to this theory.

I just wanted everyone to understand a low may be closer than we think and not to be surprised if I call a bottom this week. Gold prices crashing through the $1,200 level will abort this hypothesis.