Blow-Off Stage: The Final Stage Of The Commodity Bull Market (GLD, GDX, USO, IAU, DZZ)

Share This Article
January 10, 2012 11:49pm NYSE:DZZ NYSE:GDX

Kevin McElroy: The commodity bull market will end. All bull markets end. And when it does end, it will be replaced by another bull market – probably in stocks.

But before it ends, it will go through a final stage, typically called a blow-off stage.

And these blow-off stages are characterized by massive upward price trends – parabolic moves.

An example below is the gold (NYSEARCA:GLD) bull market of 1970-1980:

gold bull market of 1970-1980

Notice that this bull market was interrupted by a substantial 50% correction between 1974 and 1976.

But then the bull market continued, and in 1979-1980, the price of gold screamed higher in a very pronounced parabolic move.

Gold stocks (NYSEARCA:GDX) mirrored this move, skyrocketing in 1979.

Gold stocks

But it wasn’t just gold that participated in this “blow-off” stage in the 1970s.

Oil (NYSEARCA:USO) boomed as well – as you may recall.

Oil prices jumped from $3.39 a barrel in 1970 to over $37 a barrel in 1980 before languishing for the next 20 years between $11 and $20.

Today, we have not yet entered this final blow-off stage. But I believe we’re in the intermediate time of consolidation, when commodity prices languish, if not fall precipitously.

The point is, most commodity investors will get bucked by this bull. They will sell during the intermediate doldrums of this bull market. They will be selling at the worst possible time.

Because during this downturn in gold (NYSEARCA:DZZ) and oil prices, you should be a buyer – just as you should have been a buyer of gold and oil in 1974-1976 as the bull bucked.

And right now, it appears that the gold (NYSEARCA:IAU) market is losing steam.

gold market

Oil seems to be languishing as well after peaking in 2008.

Oil market

My broader point is that we have not yet entered this blow-off stage – and that is the greatest proof that the commodity bull market is still intact.

And staying in commodities now by buying on dips is the best way to insure you will profit during the next greatest stage of the commodity bull market – which could begin at any time.

Good investing,

Written By Kevin McElroy From Wyatt Research

Kevin McElroy is a top rated commodity researcher and analyst  specialist at Wyatt Investment Research, with a targeted focus on short  and long term investment opportunities.  He has worked in the investment  publishing field for over three years alongside some of the world’s  leading commodity traders and analysts.  He takes the complex futures  and options trading strategies from the floors of the Nymex and the  CBOT, uniquely combines them with economic trends and positions his  recommendations in a way that any investor, from a straight long-term  buy and hold investor to a sophisticated day trader can easily  understand, implement, and profit.

Kevin constantly finds unique ways to profit from the “real stuff”  like oil, gold, iron, corn – the energy, money, goods and food that the  world constantly needs more of.  Kevin is the daily editor to Resource Prospector and a contributor to Energy World Profits and Global Commodity Investing.

Read Next

Get Free Updates

Join over 50,000 investors who get the latest news from!

Most Popular

From Our Partners

Explore More from

Free Daily Newsletter

Get daily ETF insights from our market experts. Never miss another important market development again! respects your privacy.

Best ETFs

We've rated and ranked nearly 2,000 ETFs and ETNs using our proprietary SMART Grade system.

View Top Rated ETFs

Best Categories

We've ranked dozens of ETF categories based on relative performance.

Best ETF Categories