Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Stock Market FOMO Hits September Brick Wall - Dow Trend Forecast 2021 Review - 19th Sep 21
Dow Forecasting Neural Nets, Crossing the Rubicon With Three High Risk Chinese Tech Stocks - 18th Sep 21
If Post-1971 Monetary System Is Bad, Why Isn’t Gold Higher? - 18th Sep 21
Stock Market Shaking Off the Taper Blues - 18th Sep 21
So... This Happened! One Crypto Goes From "Little-Known" -to- "Top 10" in 6 Weeks - 18th Sep 21
Why a Financial Markets "Panic" May Be Just Around the Corner - 18th Sep 21
An Update on the End of College… and a New Way to Profit - 16th Sep 21
What Kind of Support and Services Can Your Accountant Provide? Your Main Questions Answered - 16th Sep 21
Consistent performance makes waste a good place to buy stocks - 16th Sep 21
Dow Stock Market Trend Forecasting Neural Nets Pattern Recognition - 15th Sep 21
Eurozone Impact on Gold: The ECB and the Phantom Taper - 15th Sep 21
Fed To Taper into Weakening Economy - 15th Sep 21
Gold Miners: Last of the Summer Wine - 15th Sep 21
How does product development affect a company’s market value? - 15th Sep 21
Types of Investment Property to Become Familiar with - 15th Sep 21
Is This the "Kiss of Death" for the Stocks Bull Market? - 14th Sep 21
Where Are the Stock Market Fireworks? - 14th Sep 21
Play-To-Earn Cryptocurrency Games Gain More and Is Set to Expand - 14th Sep 21
The CashFX TAP Platform - Catering to Bull Investors and Bear Investors Alike - 14th Sep 21
Why every serious investor should be focused on blockchain technology - 13th Sep 21
SPX Base Projection Reached – End of the Line? - 13th Sep 21
There are diverse ways to finance the purchase of a car - 13th Sep 21
6 Tips For Wise Investment - 13th Sep 21 - Mark_Adan
Gold Price Back Below $1,800! - 10th Sep 21
The Inflation/Deflation debate wears on… - 10th Sep 21
Silver Price seen tracking Copper prices higher - 10th Sep 21
The Pitfalls of Not Using a Solicitor for Your Divorce - 10th Sep 21
Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
This Boom-Bust Cycle in US Home Ownership Should Give Home Shoppers Pause - 9th Sep 21
Stock Market September Smackdown Coming Next? - 9th Sep 21 - Monica_Kingsley
Crazy Crypto Markets How to Buy Bitcoin, Litecoin for Half Market Price and Sell for TRIPLE! - 8th Sep 21
Sun Sea and Sand UK Holidays 2021, Scarborough in VR 180 3D! - 8th Sep 21
Bitcoin BTC Price Detailed Trend Forecast Into End 2021 - 8th Sep 21
Hyper Growth Stocks - This billionaire is now using one of our top strategies - 8th Sep 21
6 common trading mistakes to avoid at all costs - 8th Sep 21
US Dollar Upswing, S&P 500 and Nasdaq Outlook - 7th Sep 21
Dovish Assassins of the USD Index - 7th Sep 21
Weak August Payrolls: Why We Should Care - 7th Sep 21
A Mixed Stock Market - Still - 6th Sep 21
Energy Metals Build Momentum; Silver & Platinum May Follow - 6th Sep 21
What‘s Not to Love About Crypto Market Fireworks - 6th Sep 21
Surging US Home Prices and Gold – What’s the Link? - 6th Sep 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold and Silver Bear Market is in its Final Throes

Commodities / Gold and Silver 2013 Dec 20, 2013 - 11:52 AM GMT

By: Jordan_Roy_Byrne

Commodities

The Fed decision was the catalyst for the final breakdown in precious metals. On Thursday Gold closed at a new low, below $1200 and the gold shares also closed at a new low. Last week we wrote: “The bulk of the evidence leads me to believe that we probably have not seen the bottom though we are very close…..Bottoms can happen in an instant or develop through a basing process. Huge immediate rebounds originate from extreme oversold conditions. We don’t have that at the moment.”


The bad news is obvious. Precious metals are breaking again. However, the good news is this will lead to the end of the bear market and a “back up the truck” or “fat pitch” type of buying opportunity. History makes a strong case that this bear market is about to end. Couple that with precious metals touching multi-year support levels and the bear market has a very high probability of ending.

First, we’ll look at Gold. The chart below shows all of Gold’s bear markets though we excluded the two extremes: the 1980-1982 (a 65% decline) and the 1987-1993 bear (lasted five years and only declined 35%). The current bear best resembles the bears of 1976-1976 and 1983-1985. The fact that the current bear is longer suggests it will be less severe in price. Gold’s shorter bears (including 1980-1982) ended in a panic selloff. It appears this bear will share the fate.

Where would a panic selloff take Gold? Gold should find strong support at $1085 which is the 50% retracement of the entire bull market. That is a 9% decline from Thursday’s close. Also, major trendline support comes into play in the low $1100s.

Moving to the gold stocks, we can see that the current bear market (in black) only needs to go a bit further to be on par with past bear markets. Note that the three bear markets that lasted the longest were far less oversold at the current point. This suggests the current bear should end quite soon.

The chart below is a weekly line chart (weekly closes) which shows the HUI Gold Bugs index and the GDM index (forerunner to GDX). The HUI has 10% downside to 9-year support while the GDM, a broader index has 5% downside to support dating back to 2002.

History, as it does for the gold shares, makes a strong argument that the bear in Silver is nearly complete. With a bit more of a decline, the current bear will become the second worst ever. Again, note that the bear markets which lasted longer than the current one were far less oversold at the present point.

Silver, like Gold has very strong, multi-year trendline support that could mark the bottom after this final selloff.

Given the weight of this historical analysis and technical analysis, I don’t see how anyone can argue that the bear market isn’t coming to an end. Bear markets typically last two to three years and are a function of price and time. The more severe the bear is in price, the shorter it lasts. Bears that last more than a few years are less severe in price. These historical charts make a strong argument and the fact that Gold, Silver and the gold stocks are nearing decade long support should increase your confidence substantially. Moreover, the biggest bubbles (Japan, Nasdaq, Gold, 1929) on average deflated by 65% to 85% in two and a half years. The Silver bears chart shows its 87% decline in the early 1980s. If the secular bull market was over, Gold & Silver would already be trading at much lower levels.

Last week we concluded that: “The bottom line is there is no need to aggressively buy yet unless the market becomes extremely oversold and plunges to a new low. Wait for that to happen and if it doesn’t, then a base is likely developing.” Now we know that a final plunge is developing rather than a base. The key to catching a falling knife is to do so at an area of very strong support. I think we’ve laid out the strong support for Gold, Silver and the gold stocks.

If you'd be interested in professional guidance in this endeavor, then we invite you to learn more about our service.

Good Luck!

Email: Jordan@TheDailyGold.com
Service Link: http://thedailygold.com/premium

Bio: Jordan Roy-Byrne, CMT  is a Chartered Market Technician, a member of the Market Technicians Association and from 2010-2013 an official contributor to the CME Group, the largest futures exchange in the world. He is the publisher and editor of TheDailyGold Premium, a publication which emphaszies market timing and stock selection for the sophisticated investor.  Jordan's work has been featured in CNBC, Barrons, Financial Times Alphaville, and his editorials are regularly published in 321gold, Gold-Eagle, FinancialSense, GoldSeek, Kitco and Yahoo Finance. He is quoted regularly in Barrons. Jordan was a speaker at PDAC 2012, the largest mining conference in the world.

Jordan Roy-Byrne Archive

© 2005-2019 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