Gold's been frustrating, to say the least. Plus, its characteristics changed in September.
Gold failed to rise during its best seasonal time, and when the dollar was declining. These factors alone were bearish signs.
In addition, gold jewelry demand was the highest since 2010 in the third quarter, when buyers in Hong Kong and China pushed demand up 40% and 35%.
It's also reported that American Eagle silver coin sales are up at the U.S. Mint, while gold sales are up at the Perth Mint.
You'd think the prices would be up on this robust demand for physical gold and silver, but they're not.
First Bad Year Since 2000
Investors are loving to hate gold. Hedge funds are the least bullish since 2007. Some investors missed the whole bull market and are now happy to see gold tossed aside.
With each passing month, the bearish barometer continues to rise. But amazingly, gold is not breaking below the June lows easily.
It's been six months now since gold hit $1180 intraday in June. And it's recently been testing these lows.
Will it hold? .... That's the million dollar question.
At Critical Juncture
First of all, if the $1180 low is broken, then the intermediate phases will have clearly turned bearish on Chart 1, which shows one of our favorite indicators.
We call the June 2013 low, a D low. This is when gold falls the worst during a bull or bear market. An A rise and B decline then follow.
The latest A rise was fine when gold rose to its late August high near $1420, gaining about 18%. This was normal.
The B decline has been underway since then. This 16% decline has lasted over three months and it's a bigger B decline than normal, but it's still okay.
But, if gold now stays below $1330 and falls below $1180, this B decline is off, and the bear will clearly take over. We could then see $1000 gold, eventually.
So we are very close to the time of truth.