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My energy bearishness has been oft-mentioned in the hallowed halls of Slope, and the way things are going, it seems like we should drag out the late 1990s terms of how the “new economy” (Netflix, Facebook, Google) is completely dwarfing the “old economy” (crude oil, gold, silver, and other assets you can actually hold in your hand).
Looking at crude’s slippery slide, one wonders if the mid-March lows will be taking out next week:
“Gold’s going to $1000, it’s very clear from the charts.”
“Gold has to hit $800 before it finds a bottom.”
I’m here to call you on that $800 prediction, and in fact go you one better: gold is going to drop at least $400, and possibly more. No, I’m not trying to one-up all of the dire numbers various pundits have thrown out as to where the price of gold will eventually reach. Nor am I claiming that bearishness has reached a climax, and secretly hoping this is The Bottom. In fact, I don’t even believe the analysis I’m about to present is correct. So why bother to write a few hundred words about something I don’t agree with? Simply because I have been investing in gold for over 12 years, and as a prudent investor it’s vital that I consider bearish as well as bullish scenarios in my investment.
During the past 3-4 weeks, my preferred scenario called for the 10-year Yield to stall at around 2.50% followed by a decline into the 2.10-2.00% support zone prior to my expectation of the emergence of a new up-leg that propels Yield to 2.90-3.00%.
That said, however, my near-term pattern work is warning me that last week’s (Jul 9) low at 2.17% followed by a sharp rally to yesterday’s high at 2.47% signifies the end of a June-July correction and the initiation of a new up-leg.
