Gold Set to Plunge to Its Final Bottom
While this bear market is finally coming to an end, don't expect it to end quietly.
How would this final decline in Gold affect the gold stocks?
The chart below is a monthly chart of the HUI Gold Bugs Index (INDEXNYSEGIS:HUI) and the AMEX Gold Miners Index (INDEXNYSEGIS:GDM) which is the parent of the Market Vectors Gold Miners ETF (NYSEARCA:GDX). Both markets bottomed in late June not to far above the major support which dates back to 2004. In fact, we referenced this chart when we penned an editorial, one day before the June bottom. Maybe Gold will break to a new low but the gold stocks won't. If the gold stocks do make a new low, this chart is telling you that it won't last for long. There is very strong support sitting right below the summer lows.
Unless Gold is able to close above $1350 in the near-term on a weekly basis then consider the short-term trend bearish. Gold looks set to plunge to its final bottom. Gold bugs will cry manipulation, CNBC (NASDAQ:CNBC) and Twitter (NYSE:TWTR) types will be mocking the Peter Schiffs of the world and many will be calling for $900 Gold. I urge you to avoid all this nonsense and focus on one thing. Get yourself in position to take advantage of this bottom. It's the very smart money that is looking forward to buying this bottom. I suspect the coming bottom will be the one the typical huge rebounds originate from.
Editor's Note: See more from Jordan Roy-Byrne at The Daily Gold.
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