Commentaries

Another Quiet Day in the Markets

Gold went higher and won the clash of the titans match against king Dollar today, busting over $1200. Gold stocks managed to tread water and close in positive territory as a group, an amazing accomplishment in light of the carnage today. Today was an important day for Gold as the world saw it rise in almost every currency despite a market melt down. Despite all the so called market and technological advances, people still run to Gold in times of crisis, as they come to the realization that they cannot rely on the “powers that be” to fix anything and they seek the most trusted and liquid item.

Gold stocks look set to rocket higher. If we are on the verge of a market meltdown, though, Gold stocks will not be spared. I don’t think we are going to have a general stock market melt down just yet, but I certainly didn’t anticipate today’s action! I do believe the next leg of the bear market is upon us, but it could take any number of shapes and one more bounce higher to set up the juiciest shorting opportunity in equities since the fall of 2008 is not out of the question.

I am much more nervous about my Gold mining stock positions than my Gold position. I sleep like a baby knowing a large percentage of my assets are in physical Gold after a day like today. All paper debt notes will collapse in value relative to Gold as this secular stock bear market, which is far from over, continues. Gold stocks will benefit from this situation, but the road is much bumpier and Gold stocks are not as as safe as Gold. Days like today remind us of the benefits of safety and security.

I remain long and wildly bullish in the precious metals sector. It is quite likely that an intermediate-term 5th Elliott wave in the Gold price has begun. Here is a 10 year chart of the Gold price action to show you what I mean:

By the way, not everyone who has an interest in Elliott Wave is bearish on Gold just because the always-wrong-on-Gold Robert Prechter is. I am expecting Gold to surprise to the upside, as we are entering the point of recognition for this entire secular Gold bull market. This will be the move that gets the mainstream investment community interested and sets us up for the mania stage. We have much higher to go in the Gold price and the Dow to Gold ratio will get to 2 (and we could even go below 1 this cycle).