Gold 2011-2017 Review

Since the 2011 peak, gold suffered a bearish phase for about 4 1/2 years before it exploded in 2016.  In general, when a wave count just doesn’t fit well at certain points, then I try and work it from a lower degree perspective. I know that the majority of participants work only from a price perspective, and I get that, but the sad truth is that contrarians don’t work on price. They work on crowd psychology. They also never waste their time drawing a bunch of useless trend lines, nor do they spend their time drawing numbers and letters on any chart. The majority of the trading world works on “Price”, and short term trade setups. One main reason that there are so many short term traders is because they have no clue what the big trend actually is, or what it’s going to switching to.

Gold is extremely cyclical and the contrarians love this. In the cyclical gold market, “If your not a contrarian you become a victim”. Buy Low, Sell High is the contrarian way. When insiders in gold companies are buying their own shares back, then this has to get reported. The same applies when they are selling. In 2013 the gold news was full of insider buying reports and even now gold stock insiders of gold companies are buying into their own shares. I have a contrarian friend I visit regularly, and he constantly looks for insider buying before he takes any positions in any single gold related company.

Ignoring this public information, ignores a great contrarian indicator that helps us in forecasting a bull or bear market in gold and gold stocks.

Any real contrarian cannot afford to miss any big bull market in gold stocks. Sure, many times they are getting in too early, but high net worth individuals need that extra time to accumulate large positions. The idea that we should never add to a losing position is irrelevant to any contrarian. In the contrarian world, it’s all about accumulating positions in preparation for the bullish phase still to come.

I dropped the 2011 top down to a lower degree wave 3 in Intermediate degree. A lower degree level is far more sensitive than higher degree levels are, and the 2011 peak is a prime example. Many were calling for a Gold Supercycle to go to $5000-$10,000, yet gold did the opposite thing and crashed to $1050. For a Cycle degree  wave 3 top in 2011 to be in play, the $1050 price level is not nearly low enough for a Cycle degree correction to be over, but a $1050 Intermediate degree bottom, could fit.

For now, and maybe a bit longer into the new year I will look at the commodity bullish market from an Intermediate degree perspective. Since that $1050 bottom gold jumped 130% before another bearish phase kicked in. This bearish phase that ended in late 2016, is not part of the bigger bearish phase, but it’s part of the new bullish phase that started in 2016. If this is reasonably close, then eventually gold will travel above the $1919 price level. Even if doesn’t perform that well and never makes it to a new high this time, then it will do it at another time in our future.

It would be pretty exciting to see a potential diagonal set of 5 waves develop in gold, but we have to keep our options open as well.  Any big bullish phase in gold will not end just because of a big bearish dip in price. They end when the majority display extreme optimism.  Not owning bullion when the stock market is pointing up, is a constant mistake investors do and have done many times in the past.  When stories come out that investors and fund managers are dumping gold to jump into Bitcoin, it tells me investors have learned nothing about gold. Emotional investors jump on anything that’s going up, and they jump off when it’s going down.

I will try and get a few Gold stock related reviews in,  but will take a break until next week.

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