The Golden Bottom? [SPDR Gold Trust (ETF), iShares Silver Trust (ETF), Market Vectors Junior Gold Miners ETF]

natural gas-bottomToby Connor: It’s time to do a follow-up to my last Golden Bottom article. We are coming down to the wire and the action on Monday after the Swiss referendum should tell us whether gold has already formed a final bear market low, or whether we have one more drop in this intermediate cycle to the $1050 level before the final bottom.

If the vote is a yes then I suspect gold will reverse all of Friday’s losses and immediately head back up confirming that we got the final bear market bottom in early November.

If however, and I think probably the more likely scenario since the consensus is the vote is going to be a no, gold continues down on Monday then the odds are we have one last lower low in the next 5-10 days that will form a final bear market bottom somewhere around the $1000- $1050 level. Gold is already moving into the latter part of its daily cycle timing band. Monday will be day 16. The average timing band for a bottom is 18-28 days. So if the bear market didn’t already bottom in early November, it’s going to bottom in the next 5-10 days.

gold cycle

Traders and metal investors need to prepare mentally, because unless the Swiss vote turns gold back up on Monday, then we are going to see a final intermediate, yearly, and major multiyear cycle bottom over the next 1 to 2 weeks. And as I have pointed out in the past the final move into an intermediate cycle low is always quite scary. I call it the bloodbath phase. When the move encompasses an even larger degree yearly, and in this case multiyear cycle the final selling climax is always a truly mindbending event.

I’m pretty sure the OPEC decision not to cut production has ushered in the bloodbath phase for oil and the rest of the commodity complex as they move into a final three year cycle low.

CRB three year cycle low

Since oil is the driver for the commodity complex the entire sector is likely to remain under pressure until oil finishes its bloodbath phase and exhausts every last bit of selling pressure.

I’ve come up with a couple of potential targets for a bottom. The first and most likely in my opinion, would be a tag of the 200 month moving average similar to what occurred in 2009.

oil 200 month moving average

The second, but more unlikely scenario, would be a test of the secular bull market trendline.

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