To most investors, gold this month was just as surprising as the Trump win. After making a near perfect cycle low at roughly the $1,242 level on October 7 — that I forecast right on cue in accordance with my AI models … gold rallied sharply, also per my AI model forecast.
But then, last week, gold collapsed, taking out its early October cycle low, falling as low as $1,211 as I pen this column. Silver also tanked, as did the share prices of virtually all mining companies.
Typically, when a cycle low is exceeded in time and price …
In other words, when a new low comes and it’s beyond the forecast date for the original low … and the AI model is forecasting a rally, as it still is …
It’s a sign that a cycle inversion may be occurring. That’s not some fancy term I use when a forecast doesn’t pan out, or is in danger of not panning out. Many have complained that’s my way of not admitting I was wrong.
But it’s quite the contrary. The next “turning point” (read: Cycle low or high) in gold is due in December. That “turning point” can be a high or a low. The question becomes what is the market telling us about the next turning point, not whether or not there will be one.
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Another possibility is that the cycles are stretching. In other words, the October 7 low originally forecast is being pushed off by a few days and gold can still snap back and soar into December.
No, I’m not talking out of both sides of my mouth or hedging my bets. I am simply telling you how markets move. They have a hidden pattern to them, and sometimes those patterns are obvious and sometimes they are not. Good analysts recognize that, and adjust their strategy accordingly.
So apart from all this technical jargon, what do I think as a gold trader? Separate and apart from my AI models?
I think gold can test the $1,200 level, perhaps even a tad lower, and then it will rally smartly once again.
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The precious metals in general as well as mining shares are deeply oversold, and at a minimum, due for a large bounce. If that bounce gets back above $1,242 in gold — the prior October 7 low — then a cycle inversion can be avoided and gold should be off to the races again into December.
|Gold is at a critical turning point.|
But if the bounce is weak, then — we all have to face it — gold and other precious metals and miners may be headed even lower, with gold perhaps falling below $1,000 early next year.
Bottom line: Either way, gold is at a critical turning point. A turning point from which I have no doubts it will recover from and ultimately head much higher — to well over $5,000 an ounce come 2020.
Meanwhile, the Dow Industrials have not yet fully broken out to the upside. That requires — as I have said all along — a monthly close above 18,500.
That could come this month or next, or even later in 2017. But until that happens, my work shows the Dow Industrials and all U.S. stocks are on weak ground. So as strong as the market looks, do not jump in with both feet. Not until I give the signal, which of course would go to my members first.
But when it comes, it will be a doozy, for as I have said all along, the Dow Industrials are headed to 31,000+, no matter what the U.S. economy does.
Stay safe and best wishes,