I wrote my first 2013 article discussing GLD in January. In that article, I noted that my next target region for GLD is the 154/155 region. This past week, we hit a low of 154.56. So, has GLD finally bottomed?
I do not yet think so. But, I believe that another long term buying opportunity is just about at hand.
For those that have read my work in the past, you know that my primary analysis method for the metals tracks sentiment through the use of Elliott Wave analysis and Fibonacci mathematics. Yes, I know there are many "fundamentalists" that do not believe that this is possible. We have heard your "comments" many times before, and just claiming that it is not "possible" in light of the accuracy of the targets we present here is simply not reasonable. But, for most of the readership, I hope that I have at least opened your minds to the possibilities, and helped you identify turning points in these markets to generate profits.
When I see comments such as "I spent 8 years at a top money management firm where we only did fundamental analysis, NEVER looked at the technicals ... but Avi has convinced me that Elliott Wave is a powerful tool!" and "I gave up investing on PM's by fundamentals thanks to Avi's articles...it was a frustrating and useless exercise," it tells me that some people are starting to catch on. This drives my efforts to continually teach this type of analysis on Seeking Alpha, as it seems to have been somewhat productive. Ultimately, my goal is not to come onto Seeking Alpha to prove how accurate I can be, but rather to be able to teach this type of analysis to those willing to learn. As the old saying goes, "give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime."
As for the current sentiment in the gold world, I am starting to see more and more negative articles coming out on gold. Many of the gold bulls are getting frustrated, and some are actually beginning to throw in the towel. This past week, some of you may have seen Dennis Gartman's appearance on CNBC, in which he stated very clearly that "you do not want to own gold in dollar terms under any circumstances." Unfortunately, Mr. Gartman's view on the metals has been one of the best views for a contrarian investor. His dire warnings on the metals have often come near the lows of the metals, and his bullishness is often seen at the highs.
Another item to note is that the latest COT report shows the commercial traders have added to their long positions. Since they have traditionally been viewed as the leaders of the market direction, this supports a bottom will likely soon be seen.
But all of this taken together simply means we are potentially nearing the end of the year and a half consolidation in the market. But we are unable to accurately gauge where we are simply based upon anecdotal "fundamental" evidence of the current sentiment. Rather, this is where our technical analysis is exceptionally valuable.
Since we have now hit my next target, and I have said that we can still even attain targets as low as the low to mid 140 region since I called the top in the gold market in August of 2011, the question is how the market reacts from this point. For now, it seems unlikely that we are at the bottom - but we are clearly getting closer.
If GLD is unable to maintain support at the 153 level, then it will not likely stop this current decline until the 150/151 region. But, I would not expect us to break down below the 150/151 level at this time. Rather, we should, at a minimum, see a bounce from that region.
The question is if that "bounce" exhibits an "impulsive" 5 wave rally which is supported by strong buying volume or not. If so, then we may be able to consider this next bottom as "the bottom" in GLD, with upside targets easily exceeding 200. But, if the bounce is merely corrective and not supported by strong buying volume, then it opens the door to the mid to low 140's in GLD before the rally over 200 is seen. But, I do ultimately expect to see the gold market exceed $2000 potentially within the next 12 months.