Preparing For The Big Trade In Gold

The irony about the current gold market is that gold is actually slightly higher than it was two years ago in June 2013 when it made a crash low.  But many gold market pundits and the financial media have maintained their bearishness on gold for two years predicting another crash in gold.  It simply hasn’t come to pass.  The reason they’ve maintained this popular bearish view is the gold market has been devoid of hope for years now in the depression phase.  This is where people give up hope at the bottom of a market.

sentiment_cycles

What’s interesting though as the chart above points out is that the “point of maximum financial opportunity” is also the point at which people have given up on an investment.  This is a key point to realize when looking for big long term trades.  When people give up on or don’t care anymore about an investment they are no longer bidding up its price.  So when fundamentals eventually turn around for an investment that nobody is interested in it creates an explosive opportunity when demand kicks back in.

From a Stage Analysis perspective we can visualize the depression phase of an investment as a Stage 1 base.  This is where hope is abandoned for an investment and supply and demand settle into balance at a low price, after a bear market Stage 4 decline.

stageanalysischart

One thing that needs to be emphasized is that the Stage 1 basing phase can last for a long time, from months to multiple years.  This is what has plagued some of those looking for a turnaround in gold over the last couple of years.  In 2014 for instance gold attempted multiple times to breakout into a Stage 2 advance but each attempt failed and gold continued to drift.  Each failed attempt disheartens the bulls and continues to plunge more and more investors into giving up which eventually is what causes a super buying opportunity when the real Stage 2 breakout finally materializes.  This is why the “bigger the base”, the higher the potential for a big trade because the bulls have been washed out of the investment.

You can see on the chart of GLD below that gold has spent a lot of time since 2013 in a basing phase, but each breakout in gold has failed so far.  The parabolic advance in the U.S. dollar that started in mid-2014 actually plunged gold into another minor decline.  But gold has re-established a Stage 1 base even with the dollar continuing to surge.  Now gold is once again threatening the 30-week moving average with potential to move into a new Stage 2 advance.

gldstage1

What lends support that this upcoming Stage 2 breakout in gold could be the “real deal” is that gold has broken out into a new Stage 2 bull market in foreign currencies.  This underlying strength in gold has been masked by a mania in U.S. dollar, but foreign holders of gold are already experiencing a new bull trend.

gldudn

Gold stocks priced in foreign currencies have established a massive Stage 1 base that has huge potential for a new bull market.  Also if you take a look at gold mining stocks on the Canadian TSX exchange many more have started new bull markets already then U.S. listed gold stocks, which speaks to the weak Canadian dollar and the breakout of gold in Canadian dollar terms.

gdxudn

One final thing to note is that the current Stage 1 base in the gold market is one of the biggest Stage 1 bases in the financial markets right now, and in fact it’s one of the only Stage 1 bases.  Which means that as far as trading opportunities go the gold market is in line to fire off a big opportunity at some point.  And without other markets in Stage 1 bases transitioning into new bull markets to attract capital the gold market should gain a lot of attention.

Checkout my new Stage Analysis Screening Tool at: http://screener.nextbigtrade.com

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The original article and much more can be found at: http://www.nextbigtrade.com

The views and opinions expressed are for informational purposes only, and should not be considered as investment advice. Please see the disclaimer.

7 thoughts on “Preparing For The Big Trade In Gold

    1. The screener does a stage analysis calculation based on price relationship to long term moving averages. It’s probably on the cusp of being in a stage 1. I’m basically making a visual judgement call that gold is in Stage 1

  1. With such a wave pattern as a script I am sure many a insider market manipulator could make a fortune shorting the market and fleecing the investors according to the predicted cycle of the market. The idea that the market is a result of random price movements and trading patterns and therefore honest is absurd as is market prices.

  2. Hi!, Patrons Of The Next Big Trade Et. Al.:

    Larry Edelson, working under the umbrella of Dr. Martin Weiss Research out of Jupiter, Florida, has expressed over and over again that gold will bottom later in 1915 below $1,000 in his Newsletter publication and elsewhere and therefore for his subscribers to hold off from buying gold until another low sets in later. Seems to me like we may have various voices crying out from the wilderness of unknowing; as Thomas Edison once stated that not one person on this planet knows even 1 millionth of 1% about anything. So, what is it we truly know for sure? The American Institute For Economic Research in Great Barrington, MS., (888)538-1216, has stated much to the same effect, in its’ article from years back: How Do We Know We Know Anything? As my diesel mechanic here in town has told me over and over: A black swan event could change the picture for gold in an instant in either direction. Stewart Thompson writing at 321gold.com has recently stated that, if hadn’t been for what he calls the LOVE trade in gold by Chindia, gold would have already drifted down to between $300 to $800 but, alas, on the other side of his intellectual ledger regards the price of gold, he considers that FEAR TRADE events could push gold up hundreds if not thousands of $’s. Now!, it’s our turn as investors/speculators to go figure and how do we do that with so much diversity of opinions? How do we know we have any ideas that what we would do as investors in this sector determine we are accurate using OUR money to implement a mining operation? Investors DO get tired of being hammered with lost prospects when it comes to mining; until something proves profitable to their involvements with their time and their money which leads to their “knowing” that they haven’t thrown their time and their money into the wind! Thus the only defense is to be cautious regarding all the stories we hear from the advertising systems that invite US to participate in exploration and mining of resources designed as speculations as to if they will prove profitable or not in advance of true blue profitable results in the pockets of investors who decide to help.

    RUSS SMITH, CA. (One Of Our Broke, Fiat Money Corrupt States)
    resmith1942@gmail.com

  3. I disagree with your assumption…I feel we are still in the desperation phase as we have not had a capitulation yet then and only then will we be able to resume an upward move in the gold price..I have the ability to speak with some very famous financial people on a fairly regular basis and in a one on one situations these commodity specialists feel that we need that capitulation phase in order to move forward also there is a chance we could see this current bear market in the gold price extend into 2016 if it does the prices could go as low as $735 an ounce but there is only a 25-35% chance of that move playing out it’s more likely that we crash down under $1,000 sometime between now and October

    1. Think its quite possible we have a shoot up towards $1400 (monthly upper BB), before any final decline to sub $1000

    2. There is absolutely ZERO reason as to WHY Gold has to “crash” under where it is at present. It should be obvious to anyone that can fog a mirror that Gold is being manipulated both up & down daily. Look at todays waterfall as example — a straight drop of $25 + for absolutely no logical reason . The same A$$holes will ramp it up in the next week or so & book a profit.

      This will Change hopefully sooner than later & one decent black swan event is all it will take. So long as your Gold is fully paid for its just then a matter of sitting & holding aka 2008/9. Those that trade Gold & and are not in the magic circle have SFB in my opinion.

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