Hasten slowly and ye shall soon arrive. – Milarepa
We were very bullish on gold starting from 2002 and our bullishness continued until the beginning of 2011. In 2011, we started to voice concern as the Gold camp was chanting “Kumbaya my love”, and almost every Tom, Dick and Harry in the Gold market were all busy issuing higher targets. Towards the middle of 2011, there were many signs that all was not well. Key technical indicators were issuing negative divergence signals, the dollar was generating strong signals that a bottom was close at hand, and as we already stated the Gold camp was simply too ecstatic for our liking. We advised our clients to close the bulk of their bullion positions and to embrace the dollar as it was getting ready to break out; the rest, as they say, is history.
From 2011 to the present day, gold experts have continued to proclaim that a bottom is close at hand; on each occasion their dreams failed to materialize. Divorced from reality they continued to grip onto the illusion that just because the Fed was printing more money, Gold was destined to soar to new highs. If this were true, then Gold should already be trading north of $3,500. Since its inception, its sole function, albeit indirectly while boldly proclaiming to do other good deeds was to destroy the dollar. The only difference between yesteryear and today is that the Fed has decided to turbo charge the process. What one needs to understand is that Gold is very much like any other market out there. This means that like all markets, it needs to let out some steam. As it experienced a very strong run-up, it was only natural to anticipate Gold that Gold like any other market would eventually experience back breaking correction. During the market selloff, in August, Gold performed rather dismally as noted in the following statement.
During the market selloff, Gold performed rather dismally and the trend did not strengthen. All this indicates that a bottom might not be fully in place yet. Market update Sept 1st, 2015
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