Gold
has been volatile in recent weeks. It broke down, then it bounced back up. So
where does it currently stand?
Gold's
timing will help us in identifying the lows and the steps upward towards a
new bull market.
Chart 1 shows our favorite gold timing
tool. As our older readers know, gold has had recurring cycles going back for
years.
Currently,
a D decline has been underway since last March when gold's 2014 rise petered
out. D declines tend to be the worst decline in gold's cycle. And during bear
markets, D declines usually take gold to new lows for the bear market.
This is
exactly what happened this month. Most impressive, the leading indicator has
yet to fall into the extreme low areas that normally coincide with D lows...
This means gold could still go lower before this decline is over.
On the downside, gold will remain weak
below $1200, and especially below its $1180 low. And the longer this is the
case, the more likely we'll see lower lows soon.
A clear
decline below $1150 means $1100 would be a shot away. This would likely take
the indicator down to test the extreme D lows.
Gold Shares: Fell the most
Gold
shares, however, took the cake. They plunged much more than gold and silver.
And the gold share indexes fell to their 2008 lows. That is, they fell to the
lows of the depths of the financial crisis washout.
The HUI
Gold Bugs index is now starting to consolidate near these lows above 150, and
as long as that's the case, we just may see the start of constructive
base-building.
Gold
mining shares are weaker than gold, the most they've ever been since the
1960s. This weakness is not over yet, but the 5 week moving average works
well in identifying the start of a turn.
So keep
an eye on 170 for HUI. If it can stay above this level, gold shares will be
looking better and they could then be leading gold.
