You guys don't sound so confident here. I'll try to help out. You may throw some of what I say out the window but at least some of these points you will be nodding your heads in agreement.
1) Many people know gaps (especially gap ups) like to fill. There are many theories why they do but the bottom line is for whatever reason/s they almost always do. Look at gold miners and look at GDX and GLD. Many of the miners have gap ups from a few weeks ago. They have not filled. GDX and GLD, same thing. If the gaps are to fill then these must come down quite a lot and JDST and DUST will do the opposite of coarse.
2) What is the primary reason to buy gold? Inflation is the main reason. There is no inflation. The US has some but the FED really desires to raise rates which is deflationary. The rest of the world has no inflation and in fact is fighting off deflation. Gold thrives in inflation and there is none.
3) What is the secondary reason to buy gold? If you think the market stinks. This was the reason for gold's massive rise so far in this short year. The fear trade had participants jump out of the market and into "safe havens". They ran from risk and put their money elsewhere. Gold was one of the things they bought. About a month ago people started to go back into the market and the "safe havens" started to sell off some. Except for one and that is gold. The people who bought gold have not gone back. Now unlike the TVIX or something that is "anti-market" that has corrected during this market rise recently gold kept going up. If the market were to turn south again who is going to be there to buy gold? The people that wanted it bought it earlier in the year and at much cheaper prices. There will be no return of people who left the market and went to gold and then went back to the market because to do so they would have had to leave gold to get back into the market to then re-enter gold. They didn't leave gold so they can't re-enter. I'd buy the argument people will rush back to gold IF gold had sold off or corrected this past month but it didn't.
4) You can see in gold minors and GLD and GDX and whatnot the Elliot wave. They all show a textbook impulse wave. I mean almost perfect. They all look to be in wave 5. Can wave 5 go a bit higher, yes it could but looks like the juice is all used up. What comes after the impulse wave? That would be a correction wave. In reference to #1, maybe a correction wave down to those gap ups that have not filled.
5) For gold to have gone up like this the main fundamental reason would have been inflation fears. Well there are actually deflation fears in the world. Central banks are pumping like mad and at this point it is just to push back deflation. Deflation takes everything down, including gold. 2008 the world went through deflation. You know what gold did? It tanked. Gold rising due to deflation worries is backwards. It is supposed to rise because of inflation worries.
Conclusion. Market forces are against gold. Gold seems impervious to this but it will correct. There is no inflation and yet gold ripped. The market the past month has bounced back and yet gold went higher. Since gold has not corrected like it should have who will be there to buy it should the market go down again? The buyers who bought have not sold. They didn't re-enter the market. They held their gold. New buyers are supposed to come in now and pay way higher prices? I doubt it. If they were not interested in gold back in January and early February they are not going to be interested now. There won't be new buyers and there won't be people to re-enter because they never sold in the first place so where goes gold find buyers in a world fighting off deflation after it has gone up over $200 in just a couple of months? The charts show all miners and gold and gold funds extremely over-bought. The fundamentals show gold miners with very high P/E ratios. Charts show DUST and JDST very oversold and down over 80% in just a few months. All of this works completely against market forces and gold and miners will correct. Only thing that is justifiable for gold and miners not to correct is if inflation jumps big all the sudden out of no where and the chances of that at practically zero. I say to you all hear. Get your confidence up because practically all market forces point to a solid gold correction.
Knowledge + risk taking = prosperity
AI
