As per comments I have attacked this morning into further selling. Added to gold and silver, and will add to miners later. Chart at end of Friday shows gold miners bullish percent hit zero and high volume day which previously correlated with bottoms:
I am playing for the mean reversion rally, the snapback, pending resolution of whether gold remains in a secular bull or topped out in 2011. See the last secular bull for possible echoes – both green circle triangle breakdowns could apply here, with the higher the termination of the secular bull:
However, regarding the lower green circle, I maintain that we are not in 1975 by mirror, but 1979 or 1981, depending on whether we remain in the secular bull or not. There is a history of assets shaking out weak hands in a final flush before going on to make a parabolic peak. Gold also did this in late 1978, just over 12 months before making its secular parabolic peak:
Gold has now dropped just over 20% from its 2011 peak.
So three possible scenarios for you:
1. Are we in 1975, at the start of a mid-bull cyclical bear? I don’t believe so, as it does not fit with solar cycle timing. That mid-70s correction was the half-way point for the gold secular bull, but by gold-stocks and gold-real estate ratios we are close to the end, and the gold secular bull is a good 5 years older in duration at this point.
2. Are we at the turn of 1978 into 1979, just over a year from the secular top? I still rate this as the most likely, but it is very much in the balance. If this is so, then we should quickly see a recovery in gold, now that the weak hands have been shaken out and the key technical levels broken. A large and final move up to a peak in 2014 would fit very well with my solar cycling.
3. Lastly, are we in 1981, breaking down from a secular bull that in this case ended in 2011? I rate this as higher probabilty than 1. and less than 2. There is the possibility that the smoothed solar max already occurred, plus most stock indices hit secular low valutations. Stocks-commodities and real estate-commodities ratios hit low enough by secular history, if not absolute extremes.
If the third scenario is correct, then the danger is that gold falls long and hard before recovering. Although I previously showed the CCI to have already corrected a large amount from its 2011 peak versus its likely secular bottom, gold has been the commodity that has held up the best, and thus has potentially the furthest to fall. Nonetheless, nothing goes down in a straight line, and with overbearish/oversold extremes already in play, I am attacking for a bounce and will attack lower from here.