IAU is a very popular ETF that tracks the price of gold. It acts very close to what I see in the cash futures charts and GLD is basically the same. Since the gold top in 2011, which corresponded with the first peak of solar cycle #24. When this happens, it also tells me that 2011 was a major peak in gold, and I see it as a Cycle degree wave 3 top. This top is so isolated that there should be no doubt about which peak is the real one.
All analysts forget this top as they think a new leg up has started. I see it as a bear market rally and an Intermediate degree bear market rally. If gold bulls are this easy to fool and can’t tell when a bear market rally has taken place, then any “B” wave bull market in primary degree will really confuse them.
I have experienced moves like this before where the bottom falls out and IAU implodes. The rally that started in 2017 was choppy all the way up, as violent moves in both directions were happening. These choppy rallies are a clear sign that IAU has been going against the larger trend. I see it as a triangle inside a “B” wave of a zigzag 5th wave decline. There doesn’t even have to be any clear subdivisions as this is a potential “C” wave crash.
This morning I added a small short position in IAU, as it is a good time to test the next bearish phase. In most cases like this, the bottom trend line will get sliced in two, but it would find major support at the 2008 low. Most investors are never prepared for something like this to happen, but when bullish bets do not do what you expect, then you have to invert your thinking to the bearish side.
A long grinding summer bear market in gold stocks can happen, with a potential bottom in October or November 2018.