Gold’s Bear Market

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I regularly receive emails regarding Gold and Silver. Questions range from where it will be going over the next few weeks or whether or not the bear market is finished? If not, how low will it go? Should I buy it now or should I short it now? What’s the point of holding PMs when they keep going lower? And so on…

Chart 1: Gold has not shown any major signals that the bear is finished

Gold Downtrend Analogues 

Source: Short Side of Long

Gold prices peaked in early September of 2011 just above $1,920 per ounce. Today, Gold trades at $1,245 per ounce, as this mornings early European trade. The chart above shows that after Gold peaked, it consolidated in a sideways fashion for many months. Eventually, it broke down sharply during early months of 2013. Since the crash, Gold has once again consolidated in a sideways fashion for many months.

While it has attempted to break down towards new lows during late 2014, that move was negated and quickly reversed, trapping many bears. Having said that, the recent rally has failed to hold the 200 day moving average and post a higher high (definition of an uptrend), so bulls haven’t been successful either.

The price now remains in no mans land, without a major direction or trend. A break above $1,400 per ounce could restart Gold’s bull market, while a break down below $1,180 per ounce (as long as its not another trap) will probably send Gold towards $1,000 phycological level.

My advice is: instead of guessing, just wait patiently for the market to give you a clue!