was likely peaking in a wave 3 of excitement and high powered bullish sentiment. The “tells” were the articles, the CNBC mentions, the daily “CNBC GOLD” ticker at the top of their screen, and the cover of a major magazine.
Since that time, we believe GOLD has been consolidating in what we term a “wave 4” correction, which is a milder version than some others. This is part and parcel of a 5 wave rally pattern and wave 4 is necessary to cool the engines of overbought sentiment and public love of the metals. These wave 4 patterns can take many forms and shapes, but this one appears to be an irregular ABC Version which we have outlined below on the weekly chart views. The length of period of time is nearing 18 months in total, but the lows in the 1550’s were already marking price bottom territories, and now it seems more of a matter of time before we see wave 5 up really take off.
This means that Gold and Silver Exploration stocks are very cheap as well, because the senior producers are seeing their stockpiles whittled away while their grades deteriorate at the same time. Once GOLD pops over $1750 per ounce we should see a rally in all the Gold Stocks, but especially in the exploration plays, which are historically undervalued here. Take a look at our GDJX Junior Exploration Stocks chart at the bottom of this article as well. It will need some help to break the downtrend, but again we think the odds are in the savvy investors favor to speculate on a select few in this sector.
Related Tickers: SPDR Gold Trust (NYSEARCA:GLD), Gold Miners (NYSEARCA:GDX), iShares Silver ETF (NYSEARCA:SLV), Goldcorp Inc. (NYSE:GG), Barrick Gold Corporation (NYSE:ABX), Kinross Gold (NYSE:KGC), IAM Gold (NYSE:IAG).
Chris is the primary analyst and moderator of TheGoldAndOilGuy.com. He has extensive experience trading stocks, indices, ETFs, CFDs and Futures. His next-generation trading style has been thoroughly refined over the years, blending the best of all that has come before with the cutting-edge approaches that have only been possible with modern advances in systems and diverse technologies. He believes he represents the ideal combination of both the old and newschool trading techniques including pioneering a number of breakthroughs entirely his own.