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Gold bulls are frustrated and getting more discouraged by the day. Discouraged by so many false starts this year.
Since early 2017, we’ve seen repeated attempts by the yellow metal to break out decisively to new highs, above key resistance around $1,300 an ounce. Every attempt has so far fallen short.
Now, something resembling a head-and-shoulders pattern for gold has developed over the last six months. And if broken to the downside, it has bearish implications.
Gold bulls see this in the charts. And they’re beginning to throw in the towel.
You can see in the chart above, courtesy of my friends at U.S. Global, the “smart money” crowd has been unloading their gold holdings.
Hedge funds are losing faith in gold. They have been steadily reducing their net-long positions in the yellow metal. Those are now at their lowest level in nearly two years.
Of course, from a contrarian perspective, the fact that the fast-money crowd is bearish on gold is actually a bullish sign.
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The fair-weather bulls are giving up. And gold is moving from speculative, weak hands into the hands of stronger, longer-term investors.
The last time hedge funds were this underweight gold was in late 2016.
And in early 2017, the yellow metal went on to rally 15% higher!
But our own E-Wave cycle model indicates gold has more downside ahead near-term. So the frustration will continue for a few more months.
Take a look at the cycle forecast chart below. You can see that gold should continue to drift generally lower into November, with periodic rallies along the way.
The good news: By year-end, expect gold to put in a bottom and turn higher. It should even enjoy a sizeable rally into 2018.
So, patience is required for gold bulls over the next few months. But ultimately, that patience should be richly rewarded!
Looking for a more fundamental rationale to confirm the cycle forecast of higher gold prices ahead? Look no further than the chart below …
Financial markets are in uncharted territory today …
It’s a new age of unrestrained money-printing. One with central bank balance sheets worldwide bloated with nearly $20 trillion in assets … the most-toxic kind.
Now there’s talk of unwinding those balance sheets. This is going to be a tricky, uncertain process, to say the least.
That’s all the rationale one needs to expect much higher gold prices ahead.
Good investing,
Mike Burnick
P.S. Just within the past 18 months, Brookmount Explorations soared 1,900% once Wall Street caught wind. Had you owned Brookmount stock, you would have seen the value of your shares explode almost 20 times over! Read more here …
Mike Burnick, with 30 years of professional investment experience, is the Executive Director for The Edelson Institute, where he is the editor of Real Wealth Report, Gold Mining Millionaire, and E-Wave Trader. Mike has been a Registered Investment Adviser and portfolio manager responsible for the day-to-day operations of a mutual fund. He also served as Director of Research for Weiss Capital Management, where he assisted with trading and asset-allocation responsibilities for a $5 million ETF portfolio.
{ 15 comments }
So all this considered….why have you had us putting on long trades for miners which at this time are losing terribly? You say back up the truck at some time and in reality we will not have a truck to back up when you finally get it right. Looks like broken clock logic to me!
Why did you report on such a weak position, “something resembling head and shoulders” ??? What do you mean????
I C more down side long term. Well maybe your long term, and my long term is different Mike. If your long term is another 7 or 8 years i understand your report, but really??? This kind of reporting needs to not be reported and let us “gold bugs” die in peace.
Looks to me there is a force strangling the entire hard asset markets????? You might call that strangle hold “total assets of major central banks” which is also a play on words Mike. Why not say DEBT, yes DDEEEBBTTT. That is exactly how it will be said the day we see it called for what it is, and I assure you it is not ASSET??? Who is kidding who?
Humbug??????
Why do they have to unwind? What if they don’t unwind and just hold?
It is difficult to be a bull or bear with gold since there is obvious manipulation with it. It is up $17 this morning. It seems as if every time it gets close to $1300/oz it gets knocked down. Buy it as a hedge (I do) but don’t bet on long term upside. The charts are some what like tea leaves or voodoo.
TO MIke Burnick,
I have been patient for 3 years now on gold as I have watched it come crashing down. I got killed losing over $20G on AUY. I held my positions, and watched it wither away. So I figured, hold on, and go real long. Just dumped AUY after it ticked up a little after dropping to about $2.00. Off the $20.00 figure it once was. Took what was left, and rolled it into GGN. I read your monthly and you tell all of us either to hold or buy your recommended positions in the Gold, Platinum, and Palladium markets. That they are undervalued. To add 3-5% for long term Growth. HERE IS MY QUESTION: Your forecasted chart above shows us a pretty good bottoming down into November 1 and then it is time for these Commodities to move higher. So why would you tell us to buy up on things like GG, Kinross, GGN and many other Metals stocks knowing we are going to see an adjustment downward that you- yourself are telling us? Buy or add to our positons now knowing the market will take a short term drop before taking off? WHAT AM I MISSING HERE?
Stephen S. Ettinger
I look at gold as a hedge,against the ignorance and greed of American voters.I mean,does anyone think most voters have any competence to be voting?A too large,powerful govt controlled by voters who are incompetent and end up voting their short term greed,isn’t a recipe for a great country.Not to mention that a house divided falls.
Mike,
Thank you for the Gold chart. What are your thoughts pertaining speculative JNUG & NUG?
Mike Been following “whoever” from Weiss for over 15 years. Their experts say “buy”, so I do and it goes down, then they say “sell” and it goes up. I am stuck with their Gold miners millionairs service, to date lost money, am on outside waiting for my own bottom and then will make a move. Only people making money are those who sell the service.
Every time I see your charts the goal posts have shifted. You also said that gold would go down this week and then we would get a better price to sell jnug. Now your chart says that it is going to go right down.
Larry also said he would give us a list of companies to invest in after the correction included in the price of the subscription.
The natives are clearly restless.
I’ve been watching the gold and silver market for a number of years and am convinced that the prices are being surpressed in silver and being manipulated in gold, are the futures boys the culprits playing the games??? Also the expected surge in buying by the middle east after their rules were changed the end of March. Was this story another scam? No wonder I’m getting cynical!
Gold rise is when greed turns to fear. Unfortunately greed is blind and with Dow rising at amicable rate. Who wouldn’t want to pump and dump.
When US dollar sink, gold should rise but it didn’t because when Dow rises everything else is secondary. Even yen is rising. So what does this tell us?
Forget fundamentals when it comes to currency, commodities and futures and focus on capital gains aka technical analysis.
If you are investing focus on blue cheap stocks. They have marginal growth when the market is bullish but buy and hold when they fall when Vix index is high.
Gold is rising but it gets rejected at 1295. The next resistance is a whole number at 1300. If this level gets broken we will be back to the level where Trump was announced as president. NOV 11 2016.
China and Russia are not stupid, I’m in for the long haul, I’m not fond of hording US Federal Notes I’ll bet on real money, Silver & Gold, as China, Russia and India, they know what’s coming and its not pretty for our fake money.
Gold and silver are now near their local peaks, and because the money stock velocity is still declining, I suspect gold and silver will continue to decline also. Therefore, we are still in a deflationary period where I see gold going down to $950 or lower and silver to $10 or lower before this bear market is over and a new bull market begins.
Mike ,
Larry predicted the price of gold would be around $5,000 OZ by 2020 ??
And I think there are Gnomes in the bottom of my garden !!