Before I start I am not some expert who preaches about the "funny mentals" there are far more experienced commentators around that can tell you more about gold, I am a mere mortal, all I do is trade price, I don't use the news regarding why gold should be up or down, I simply count waves.
However the question as per the title is?
Is The Gold Bull Really Dead?
Now the bull maybe dead and really to roll over and die, some fundamentalists of gold will suggest that the central banks will money print and gold will go to $5000 or $10,000 or whatever figures they can come up with.
Investors can come up with all sorts of reasons why a market will do something, but the bottom line is:
The only thing that pays is price.
As the bulls have found out at the highs on that parabolic move into the move near $2000, following the heard into the slaughter house generally means you get sliced and diced, and the lack of bullish commentary presently, sure does paint a bleak picture.
However that's exactly the sort of thing I would be looking for, when most are looking one way, I generally like to look the other way, especially when my work suggests it at extremes.
You would not have seen such lackluster bullishness at near $2000 the world was awash with gold going to $5000 etc.
The markets simply never changed and those that have been a student of the markets along with sentiment tend to notice that the same behavior. We see on lows and highs it tends to be the complete opposite to the herd.
Now we don't hear about gold to $5000, well it's not exactly being shouted from the roof tops.
This is the issue about falling in love with a trade and not being rational about what price is doing, those that failed to notice that parabolic blow off, sadly I am sure are nursing some losses, near 20% is a nasty chunk, even 10% is a nasty slice to be taken out of your portfolio.
So is the bull really dead?
Well I am not exactly convinced, I can make a case for the high finally in, and the Bull Run is over, but price action atm technically is still in an uptrend.
What we could have experienced is a reversion back to the mean, and we have took out the blow off buyers, and wiped out the weak hands, those that bought into the fairy tale about making easy $$$ at $1850 and its going to $5000, just learnt the hard way that the market don't take prisoners.
I suspect those traders/investors won't be coming back for long while having seen 10-15% wiped off their purchases.
But now gold is starting to make sense as a potential low risk opportunity to buy cheaper than it was it.
I actually think we are coming into a strong area and one that will decide the fate once and for all.
You can see atm, its only really testing the previous correction from 2008, and a similar fractal (shown in blue).
But the lows at around $1530 look a likely target, but testing those lows will also see a bunch of sell stops get triggered as it's an obvious place for traders, having suggested to sell gold when it was around $1850 in August 2011, I am now seriously look for an opportunity to buy gold on the cheap.
Reasons being, if gold has indeed topped then this is going to simply puke far lower than the $1400 and a potential event similar to 2008 is setting up.
Gold won't survive; it will get dumped like the rest as forced margin calls will force everyone to sell the good with the bad.
So whilst it hovers around this area $100 +/- there potential is that this is a correction and the bull will come roaring back. I think it offers a low risk opportunity to find out, if it's wrong, simply dump it and get back in cash.
If the bull is really dead this slices through the $1400 area and $1000 or $700 could be targets.
It's now that the opportunity arises or could be shortly that serious traders need to step up, the potential is for resumption higher and back above $2000, the risk is small, if an event like 2008, then you simply dump it and take the small loss and eventually buy it back and far far lower prices.
However if it indeed is coming back to the existing trend then it's simply a correction that has shook off weak hands and given the serious traders a great opportunity to buy.
A serious move under $1400 is a big warning sign for this bull trend and needs to be respected, but for now, we are finally coming into some much awaited targets.
"Buy low, sell high."
Until next time.
Have a profitable week ahead.