In my last article I warned that a breakdown out of a triangle consolidation typically leads to a very swift and scary downside move, and this is just what has happened to gold and silver.

Unfortunately it does not look like this correction is over, even though the decline has been quite severe to this point. I have a big cluster of fractal projections down at $675, so that looks like the final destination for this corrective pattern.

The weekly fractal dimension supports this idea, as so far this decline has only carried this indicator down to the mid-40s. Most strong trends run out of energy when the fractal dimension is in the low-to-mid 30s, so there is still plenty of available energy to push gold down to the $675 target.

It's also important to remember that a severe correction like this is a normal and healthy part of a multi-year bull market pattern. The purpose of this correction is to generate a large amount of fear and uncertainty in a short period of time, to create the right sentiment mix for the next rally. Gold can only turn around and head back up when a majority of bulls have abandoned their positions.

According to my projections, this final "breaking point" should be somewhere between $675 - $720.

Anecdotally-speaking, I'm also seeing lots of commentary from the gold community about how this is a great buying opportunity right here. At the actual bottom only a handful of people will be willing to stick their necks out and call it a buying opportunity, as this correction should take gold so low that nobody wants it anymore, as the perceived risk is just too great.

So even though it's been bad to this point, it has to get really bad before it's over. It's possible that gold will even need to go lower than $675, so that is why we always have to wait for our specific buy trigger, even off these big targeted energy levels.

The good news is gold should rebound very energetically off $675, and that should end up being the multi-year low that sets up the next strong leg up for the bull market.

The situation in silver is even more severe, which is invariably the case with the "wild child" of the precious metals. This has been a meltdown of historic proportions in silver, but the coming rebound should also be historic, so this is an opportunity we do not want to miss. Silver is set to deliver the most profitable trading opportunity of the year.

It's actually a fairly simple concept to understand why the rebound off this sort of decline can be particularly profitable, as it's exactly equivalent to pushing a spring a down until all the coils are tight. The harder and farther you push the springs -- so-called "spring-loading" them -- the more energy will come out in the opposite direction when it is finally released.

So the job right here is to figure out the spot where silver will have been pushed down too far, and the energy has no other choice but to release back to the upside. One thing we don't want to do is step in too early on silver, as the free-fall declines in this market are breath-taking, and we don't want to get caught up in one of those.

One last note on gold: there is a scenario right now where gold could rally strongly higher, but a few things have to fall into place for a true reversal pattern to develop off the recent low. So if we get a buy trigger right here, it will definitely be worth moving back into a long position, but we only want to do it if a few specific things fall into place from here.

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