Everyone seems to think gold has bottomed, but the fact of the matter is this: Nothing could be further from the truth.
Yes, gold has rallied off its lows. Yes, gold could stage one more rally, as high as $1,365 according to my models. And yes, miners could rally a tad more.
But the key question remains: Has gold really bottomed? Is it in a new bull market now, headed to new record highs?
NO WAY!
FIRST, consider this chart of gold:
As you can clearly see, gold’s rally since December is very minor and more importantly, gold is now having trouble at the first levels of major overhead resistance at the $1,300 to $1,325 level.
If gold were to manage to break through that level, then additional strong resistance will be found at $1,365, where I have a system monthly buy signal.
Only a month-end close above $1,365 would gold indicate a possible pause in trend, and even then, it would not indicate a new bull market; merely a very strong bounce.
However, at this time, it is extremely doubtful that gold could manage a close above $1,365.
Instead, although the current rally could continue, the gold market is setting up a trap, one that will suck in unsuspecting investors, only to chew them up and spit them out when the next down leg forms, which will take gold below $1,000.
The picture is the same for silver, platinum and palladium, as well as the mining sector. Though the current rally could continue a bit longer, the rallies are sucker traps.
SECOND, consider the cycles in gold, per this chart.
Based on over a billion calculations of time series data for gold, this chart clearly shows that — while gold can indeed rally a tad more into mid-February … ultimately this rally will fail and gold will plunge to new lows in May.
Keep in mind this cycle chart measures the TIMING for gold’s next move. It is NOT an exact indication of price.
It’s telling me loud and clear to expect a February peak in gold followed by a full four-month bear market …
One that will likely take gold to new lows, which would be retested in June, syncing up nicely with my longer-term models.
THIRD, consider the sorry state of affairs Europe is in. Europe is crashing, the single currency experiment is a massive failure.
The European Central Bank’s latest printing efforts will change nothing, and instead, will merely accelerate the capital flight out of Europe, and hence, Europe’s collapse.
Moreover, Greece’s latest election — ushering in an anti-austerity party — is likely to soon lead Greece to exit the euro, setting off a domino effect as other European Union countries that are suffering begin to see the light of day — and that the only way out of their suffering is to leave the euro behind.
FOURTH, consider deflation. It is almost everywhere now, negatively impacting all commodity prices. Nearly every commodity on the board is set for further declines in the weeks and months ahead, among the weakest being oil, which should plunge to the $30 level later this year.
FIFTH, the dollar. Though short-term its rally is a bit long in the tooth, the dollar’s massive breakout cannot be underestimated. At an 11-year high against the euro, and at a 12-year high basis the Dollar Index  …
The dollar remains poised for further gains in the months ahead as the euro crumbles further.
Bottom line:
Do NOT get long the gold market right now.
Or any precious metals. Or any miners.
Do NOT fall for the pitches that claim precious metals are in a new bull market.
Do NOT buy mining shares. They have not yet bottomed either.
Keep in mind that most of the analysts who believe gold has bottomed have something to sell you; namely gold and silver bullion or rare coins. Do you think those analysts sales prospects are all that good if they told you gold prices are headed lower?
Hardly. Which is precisely why they are so biased, jumping on almost every up move to declare the bottom is in. They want to sell you something. Period.
I have no hidden agendas. I call it like I see it. Gold has NOT yet bottomed, Period.
Instead, realize what the current rally is: Nothing more than a bear market bounce.
A trap that will lead to devastating losses for those who get caught in it.
Stay tuned and best wishes,
Larry
Larry Edelson, one of the world’s foremost experts on gold and precious metals, is the editor of Real Wealth Report and Supercycle Trader.
Larry has called the ups and downs in the gold market time and again. As a result, he is often called upon by the media for his investing views. Larry has been featured on Bloomberg, Reuters and CNBC as well as The New York Times and New York Sun.
{ 38 comments }
right on! when nobody wants to own gold, i’ll buy it again.
If you are wise you will buy it now and while you still can. Richard Russell prediction is that there will be no above ground gold at the end of 2015. Wait for $1000 and you’ll wait for a long long time. The wheels are coming off the global financial system bus now and it won’t be pretty.
dirt cheap oil and rock bottom interest rates puts us smack dab at the beginning of a new cycle in stocks. the transition is always ruff. gold is a useless shiny rock.
Over confidence goes before a fall
no much confidence out there now.
i’ve already been waiting a long time. when the gold bubble popped a few years ago i expected to see a typical 50% retracement over the next several years. the gold sell off does not appear to be over yet.
Larry, how come you didn’t see this “bounce” back in Oct when you called for gold to go lower still? What was wrong with your models? Why should we believe your models now?
And just to pat myself on the back, in these comments back in July I called for gold/silver to go down into November when you called the “bottom”. In November, I called for gold/silver to head higher until the end of January when you said the bear market would continue. Now I call for gold/silver to head lower to the end of March when you continue to expect a bounce. You are consistently wrong and I don’t think you have the correct cycle patterns.
The self assured arrogance is what I like.
When you are consistently right, people take notice.
The long-term uptrend, graphed with the yellow median-line set trending up, represents a trend that began in 1985 or thereabouts, when the gasoline additive Tetraethyl Lead got phased out in Europe, and the Degussa chemical company of Germany needed another use for the sodium metal it made for the gasoline additives industry. Both major global sodium smelters, Degussa and DuPont, opened sodamide-process cyanide production in North America, to consume the sodium metal. Most of that cyanide found its way into heap-leach gold mining, and gold prices dropped to about $400 per ounce, then rose slowly for 30 years, as the purity of available gold ores dropped, and more of the cyanide got chewed up by impurities (chiefly copper and some siiver) in the gold ores available. The uptrend works out to be about 54 cents per week, per ounce, on average, during that period. Gold prices rose in panic from the 2008 financial crisis, then dropped on Nevsun Resources iron-zinc mine opening in Eritrea, which required them to remove a layer of rock that was contaminated with copper and gold, to get at the iron and zinc. Nevsun dumped that gold on global markets from 2011-2013 and the price fell. It has continued falling, until it nearly broke out below the 54 cents per week long-term trend, then began following that trend back up.
If nothing changes that long-term price trend, gold will reach $5000 per ounce sometime around September 5th, 2146.
Thus, what drives the price of gold, is instability of currencies brought on by war. I won’t wait 131 years for the diminished amount of pure gold in known or inferred mineral reserves, to push the price up higher. But any sort of political panic, resulting from governments unable to pay their debts, is likely to trigger a run on gold (and other commodities).
Meanwhile, kudos to the Swiss central bank, for figuring out that they can charge a higher fee for storing Swiss Franc deposits. At 0.75 percent per annum, the storage fee has made it cheaper to rent warehouse space and store gold in it…a common Swiss business. Those who really prefer Swiss Francs to gold, pay a small premium now, to hold Swiss Francs instead of gold. This is much smarter than printing Swiss Francs to buy Euros as fast as Europe can print more Euros.
Smart man.
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THANKS LARRY FOR THE UP DATE NOBODY CALLS THE GOLD MARKET BETTER THAN YOU.
You must be on magic mushrooms. Larry has lost all credibility with his constant prediction flip-flops.
Tom, you’re totally clueless. Larry is one of the worst market timers in the business.
Tom, you obviously do not put your money where Edelson mouth is.
meanwhile mike larson sent out an e-mail come-on a few weeks ago for his newsletter in which he shouted the fed meeting on the 28th would see higher rates set. so much for that huh, mike?
Larry call the bottom in June 30 last year and was WRONG. Now is calling for lower prices? Check his record out. Not so good/
http://www.moneyandmarkets.com/gold-silver-mining-shares-read-forever-hold-peace-62673
I read some of Larry for entertainment. His memory is short and he doesn’t own up to his miscalls. Maybe as much as a year ago (maybe less) he’s shouting buy gold and silver. Wrong!
He is so wedded to his ‘proprietary’ charts that he can’t see the forest for the trees. He needs to wake up and smell the rest of the financial world. Larry needs to take a look at the COMEX charts and activity. The action in gold and silver is being manipulated by the Fed and their partners to keep it suppressed the huge suppression activity on a somewhat regular basis is there to see. He thinks there is none. Maybe the COMEX will be a refreshing sight to him. He thinks that his support and resistance levels are critical but they are worthless. His charts are meaningless when there is manipulation. There is not and hasn’t been any true price discovery for a long time and therefore, his charts are worthless. Wake up!
agree,here many people forget about big call for gold at 2000 made by Edelson. Since end of 2013 he was forecasting a big uptrend for gold – moreover recently missed many calls.
Then sometime he write everything and the opposite of everything.
I always repeat about the doubt that Edelson only care to get more subscriptions
Mr. Edelson, I certainly am not going to debate someone whose passions run as deeply as yours – I am convinced you believe the price of gold will decline further, and I believe your sole motivation in your articles is to try to protect your readers from what you see as a catastrophic mistake. I have no issue with you at all. What I am concerned about is the concurrent interpretation of a wide variety of disparate charts which you shared with everyone in your article yesterday (I think). We are in a very unique time – just like 1929 and 1972 and 1980 and 2008 and 2009 were unique – but reality and pronostication today are even more questionable because every central bank is going its own way in a very turbulent time, often following contradictory paths, and none of them truly understand what they are doing. Hell, we have four countries on the Gulf of Arabia who are not more than two generations removed from cooking over camel crap fires who have decided to destroy the global oil market in an attempt to preserve their “market share” – FOUR COUNTRIES, In 1930, the economy was a train wreck, but it was NOT GLOBAL AND INTERDEPENDENT, and those in charge did exactly what was necessary for their own countries, they threw a bucket of chlorine into the pool, then drained the pool, refilled it, and started over. The “reconstruction” was putting people back to work, not practicing economic voodoo while trying to preserve institutions and governments that should have been allowed to fail and disappear. I do not know if the coming world deflation will stimulate the price of gold, or if the governments and central banks which so desperately fear the return of a gold bull market and the possible resultant gold standard will prevail. In reality, I really do not think it matters. You see, I believe in the war cycles, and history does repeat itself. The next Presidential administration may be Kerensky-like, then, as the saying goes, all Hell will break loose.
Larry, you should declare your positions in gold before giving negative comment about other gold analyst. Are you heavily shorted gold ?
After casting my “African chicken bones” and reading the message which said; ‘Don’t listen to Larry, hold physical gold bullion under your own control and if possible add more.’
Always pay close attention to my “bones” since they have beat Larry’s calls every time!
Gold is going up in non dollar currencies , same with silver, and the BRICS are getting out of the petro dollar and buy gold hand over fist. The privately owned fed and the other central banks of the world are all buying gold and germany is taking its gold back from the fed in NYC.
keep it simple. if stocks go up, gold will go down.
keep it simple. dirt cheap oil and rock bottom rates mean stocks will go up.
Follow larrys advice and get broke.
Tom ….and go broke !!!
What am I missing? Wasn’t it obvious to everyone four or even five years ago that the precious metals markets are totally controlled? You can see it on a daily basis in the trading charts. Therefore,”Technical Analysis” of charts has no predictive value in these markets. Larry’s analysis seems entirely dependent on this skill.
Larry gets it more wrong than right.
Mike always tries to scare punters into buying what ever he is selling, the 28th has passed.
Larry tells us that the dow is on its way to 30000.
Who do you believe?
I am already locked in to the gold market no matter which way it goes. I hired and advisor 3 years ago and I majored in gold and silver bullion and mining shares. I bought above the 1800 level and have seen a steady decline since.I do expect the price will rise in the next few years and hope I live long enough to see it.
Cheers,
Edmund
“There by the grace of god goes I”
Larry, in one of your news letters you had us in two gold mining stocks–one has been stopped out–we are still holding another with a stop loss order, and yet as of today you are saying do not own any miners- why then have we not sold out KGC?? AL
As much or as often Larry can be wrong or was wrong wouldn’t it be a hoot if he is right THIS time ? But because of his past records nobody believes him anymore . As I said – IT WOULD BE A HOOT !
We have dumped on Larry for many month now – I’m sure things will change . When I was with Larry he had a list of miners he had in mind to recommend but it was always too early . One of those miners was GSS – GSS fell from the recent $ 0.50 to $ .016 . The 2008 low was $ 0.40 … cut into 1/2 of that — unreal .
What a fall , right ? Sure and guess what ? It came right back to at least $ .35 . This move – if bought at the low $ .16-$.19 and sold close to the $ 0.30’s ….a bigger gain than any 3x ETF which most people don’t hold long enough or to long . . Next time try it .
Your coverage is both technical and thorough. I am happy with your analysis.
Sincerely,Ramon Ruiz.
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