Close X Cookies are necessary for the proper functioning of 24hGold.com. By continuing your navigation on our website, you are accepting the use of cookies.
To learn more about cookies ...
EnglishFrench
Gold & Silver Prices in

Has the Correction Finally Begun?

IMG Auteur
Published : March 07th, 2012
492 words - Reading time : 1 - 1 minutes
( 3 votes, 3.3/5 ) , 1 commentary
Print article
  Article Comments Comment this article Rating All Articles  
0
Send
1
comment
Our Newsletter...

 

 

 

 

Today is a classic example of why I have been warning traders not to push the long side of the stock market. When these creeper trends finally break they often generate a crash or semi crash type of profit-taking event.

The last 2 1/2 months were a classic example of why I have been warning traders not to short the stock market. These creeper trends can go on much longer than many people expect and shorts just end up getting whipsawed out multiple times until they're so shell shocked that they can't hold on when they finally do catch the top.

All in all the correct strategy was to remain in cash until the profit-taking event occurred and then buy as close to the bottom as possible.

If I had to guess I would say this will probably turn into a two step down affair followed by a two-month volatile consolidation as the dollar rally progresses.

You might recall in my
last post I mentioned that the dollar would need to get on the upside of an intermediate cycle before stocks had any realistic chance of correcting. I outlined the conditions that would confirm that the dollar had formed an intermediate cycle low. Those conditions have now been met and it appears that the stock market is ready to deliver the much anticipated profit-taking event.





During this period gold should drift generally downward over the next couple of months as the dollar rallies.






There will be plenty of false rallies (just like last Thursday) to sucker traders back in. But I really doubt gold will put in a lasting bottom until the dollar's intermediate cycle tops. Barring a public announcement of QE3, that is unlikely to happen until sentiment reaches extremes again. That almost always requires a move to new highs and usually takes a minimum of one and a half to two months to generate that kind of bullish sentiment.

As I have been warning traders for months the dollar's rally out of its three year cycle low almost certainly isn't done yet. The rally out of a three year cycle low usually lasts at least a year, and that's the norm in a secular bear market. Since the three year cycle low bottomed in May of 2011 it's unlikely that we would see a final top until at least May of this year. And since the three year cycle low in 2011 held above the three year cycle low that occurred in 2008, there is even a case to be made that the dollar has now entered a secular bull market.






This would imply that despite Bernanke's best efforts the forces of deflation may be overwhelming the central bank's efforts to reflate. However I'm confident that if 10 trillion isn't enough Bernanke will not hesitate to print 50 trillion. I have little doubt that no matter how this progresses it is going to end in a massive inflationary currency crisis.


 

 

<< Previous article
Rate :Average :3.3 (3 votes)
>> Next article
Toby Connor is the author of Gold Scents, a financial blog with a special emphasis on the gold secular bull market. Toby's premium service includes daily reports and an extensive weekend report.
Latest comment posted for this article
sorry I made an error in rating this article. the system is not working properly. It is a great article. Read more
pcanon - 3/9/2012 at 10:40 AM GMT
Top articles
Latest Comments
A Salvo in the Battle for the Go...
27 Febovertheedge
I would argue that the devil is in the details, i.e. the definition of money. What the people of the US are using is currency. Currency bei...
A Salvo in the Battle for the Go...
26 FebFrankinca1
Sort of written for a PHD in economics, which gold believers (myself) are not often that well educated, have difficulty following. The definition o...
A Salvo in the Battle for the Go...
26 Feb07788525833
The dollar has a monopoly over all other types of money which is rammed down peoples throats by gun and drones , any one wanting to change this...
In Search of the Magic Wand: Car...
25 FebDoom
Yes, stay away from University of Phoenix, a school with a 9% graduation rate, that only gets students because it spends $200,000 a day on Google a...
Emails From Kiev: Free Speech Va...
25 Febovertheedge
"The problem is, the asshats associated with Poroshenko are even worse than he is." I'm assuming you mean the predators in the US White Ho...
The Bull Case For Gold This Year...
25 Febdepourcq
You talked about all the wrong reasons that gold will rise or fall, their is only one that everyone should know. The US has a debt of 18.134 trilli...
The Bull Case For Gold This Year...
25 Febneville
The fact that you are very lowly rated might be one of two things .1.You have been playing this card to often (Bear Joker) 2,The other is that you ...
Interventionism Kills: Post-Coup...
24 Febjox
A nice summary of what actually happened. It's sad that few europeans and even fewer americans are going to read it. My opinion is that US...
Most commented articlesFavoritesMore...
World PM Newsflow
ALL
GOLD
SILVER
PGM & DIAMONDS
OIL & GAS
OTHER METALS
Mining Company News
Tinka Resources(Ag)TK.V
Announces AGM Results
CA$ 0.27-12.90%Trend Power :
Corporate news
Silver Standard(Ag-Au-Cu)SSO.TO
Early Glance: Silver companies
CA$ 6.57-0.90%Trend Power :
Corporate news
Pan American Silver(Ag-Au-Cu)PAAS
Early Glance: Silver companies
US$ 9.68+1.04%Trend Power :
Corporate news
Gold Fields(Cu-Ni-Mo)GFI
Early Glance: Gold companies
US$ 4.65+0.87%Trend Power :
Corporate news
Randgold Res.(Au)GOLD
- Total Voting Rights
US$ 79.19+0.24%Trend Power :
Corporate news
Continental Precious Min.(Ag-Au-Co)CZQ.TO
Engages Golder Associates for the Next Step in the Development of the Viken Project
CA$ 0.56-6.67%Trend Power :
Corporate news
Beaufield Res.(Ag-Au-Ni)BFD.V
Reports Annual General Meeting Results
CA$ 0.04-11.11%Trend Power :
Corporate news
Probe Mines(Ag-Au-Cu)PRB.V
Leading Independent Advisory Firms ISS and Glass Lewis Recommend Shareholders of Probe Mines
CA$ 4.94+0.82%Trend Power :
Corporate news
Newmont(Cu-Le-Ni)NEM
Why the Earnings Streak Will Continue for Newmont Mining (NEM) - Tale of the Tape
US$ 26.33+0.08%Trend Power :
Corporate news
Newmont(Cu-Le-Ni)NEM
Increased Earnings Estimates Seen for Newmont Mining (NEM): Can It Move Higher? - Tale of the Tape
US$ 26.33+0.08%Trend Power :
Corporate news
Comments closed
  All Favorites Best Rated  
sorry I made an error in rating this article. the system is not working properly. It is a great article.
Subscribe to 24hGold’s daily market briefing
  • Prices and data of precious metals in 119 currencies and world mining companies
  • Daily analysis of the economy, markets and more
  • Free, daily and indispensable
Stay informed, subscribe now !
* Your email will never be shared.