All Things Precious Metals

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Gold & Gold Stocks - How To Recognize An Emerging Bull Market
Submitted by Tyler Durden on 10/15/2015 10:37 -0400

http://www.zerohedge.com/news/2015-10-15/gold-gold-stocks-how-recognize-emerging-bull-market

The Current Situation

We have last discussed the gold sector in a series of posts between August 11 and September 1, arguing that an interesting risk-reward proposition could be discerned, both from a longer term investment perspective and a shorter term trading perspective. In particular, with a major support level nearby, and a great many similarities in the technical set-up to previous significant lows (plus a fundamental backdrop with growing potential to shift to a more bullish configuration), an opportunity combining potentially high return with minimal risk had emerged again (meaning that risk could be minimized by using the nearby support level as a stop)...

...Conclusion

As we have said at the outset already, we are not predicting a specific outcome, although the current technical and fundamental evidence leads us personally to believe that the recent low in gold stocks is likely to turn out to be of the medium to long term variety, i.e., we believe a significant low has finally been put in.

However, our personal beliefs, resp. interpretation of the data may turn out to be wrong – we cannot know with certainty what the future will bring. If e.g. the global and specifically the US economy were to unexpectedly strengthen, the fundamental backdrop for gold would worsen again. We think this is unlikely, but it is not something we can categorically rule out over the short to medium term.

We can however state with confidence that the bubble will eventually burst and that the greatest monetary policy experiment of the post WW2 era will fail – in all likelihood quite spectacularly. So we have every reason to remain long term bullish on gold and gold-related investments.

Moreover, by looking closely at past lows of significance we have hopefully been able to provide a bit of a road map in case the recent low does indeed represent a major pivot point. Although the sample size we presented is small, we have no reason to expect that things will be much different from how they played out at previous lows. We haven’t shown the lows of the 1930s – 1970s period in this post, but can actually tell you that the patterns were very similar as well.

Tons more commentary and charts at the link above...