Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

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.

There are a few more important things to note. Gold from 1975-1976 had a very weak rally from point A to B. It was in a weaker position and then consolidated for the longest. That is why it had the steepest final decline. The S&P in 2009 consolidated for only four months. When it broke to a new low, it made its final low the next week. Like the S&P 500, Gold today had a stronger rally from point A to B. Also, unlike the other two Gold today has been in a bear market for over two years. Considering these things, I'd expect Gold's final bottom to be more similar to the S&P in 2009 than Gold in 1976.

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.

Good luck!

Editor's Note: See more from Jordan Roy-Byrne at The Daily Gold.
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

Featured Videos