Gold Analysis...The Path Forward

Where is gold heading to in the near term future? Please read on as I will provide my thoughts and give a quick analysis on the future path forward for the yellow metal.

After hitting a record high of $1900 per ounce in 2011, gold had a very long and devastating bear market which I believe finally came to an end in Dec 2015. At the lows, a spring was formed and gold had a very strong rally that showed a change in character from the bearish price action, as it broke the long term descending trend-line from Aug 2013. Gold was hot like fire last year and everyone in the mainstream news was talking about it. However, after Trump won the elections gold took a turn for the worst and plunged. It rallied nicely from those lows but again it is now showing signs of weakness. I believe that gold is still stuck in a consolidation phase and there is some more backing and filling to be done. Gold has been building a large base since 2013, an accumulation phase, which is almost complete after which prices should finally be released back to the upside.

Looking at the chart above we see that after the minor sign of strength (SOS) last year, gold fell back to a last point of support (LPS). Prices have been weak this month after a 6 month rally and now I believe we will get another LPS sometime this summer, which will probably be the last time we see low prices in gold again for years to come. At the end of an accumulation phase, big money players have finished acquiring shares at wholesale prices and are ready to mark up the asset. Once we break out of the range (yellow box) to the upside, we should retest the highs of $1900.

Looking at the structure of an accumulation phase I believe we are approaching the area of (10) as seen in the diagram above. We will then move on to phase D and then the markup campaign should begin.

Here are my views on the short term price direction for gold:

Gold is in its decline to a daily cycle low. It should break the yellow trendlines to signal that the larger intermediate cycle is in decline. There will probably be a bounce out of this DCL but it should form as a left translated cycle (dead cat bounce) as it is late in golds intermediate cycle and we are due for an intermediate cycle low. My best guess is that this low could occur anywhere from 1180-1200 by August the latest. That low should mark the final cycle low and it will be a GREAT buying opportunity. Buy some coins, bars or whatever you prefer. Even if gold dips a little further, view this as a long term investment because if we are near the end of this long drawn out bottoming process, the rewards will be worth it as we should hit at least $1400 in short order.

With the advent of crypto currencies the majority of people are no longer interested in gold as an investment. The best time to acquire an asset is when it is hated and when no one is no longer paying attention to it so still keep gold on your radar. As gold stealthily continues this bottoming pattern there will be a great opportunity to buy the yellow metal at bargain prices soon.

What are your opinions on gold? I hope to share thoughts with other traders here.

Please upvote and follow, thanks! GL Traders