Confessions Of A Gold Analyst: I Have Been Stricken By FOMO

One has had to search quite hard to find a point of neutrality in the metals market over the years.  If one had performed a search in the past, they either encountered gold bugs, which are super bulls, or gold haters, who believe that gold will never be a good investment.

But, as of late, we have developed a new class within the metals market.  This new group is generally bullish on this complex for the long term, but they are certain that one should not even consider buying until we see a strong capitulation with a spike down below the $1,000 level.  I call them the “below-1k-dip-buyers.”  

Now, I have to be honest and admit that I proudly considered myself within this class of investors not too long ago.  In fact, even before the market topped within $6 of my target back in 2011, I suggested that the correction can take us down as low as the $700-$1,000 region, despite the mass disbelief at the time.  But, as this “below-1k-dip-buyers” class has grown quite large, I am now questioning the wisdom of such affiliation.

Ideally, this new class of investor makes the most sense of all.  The perspective is that a final spike down below the psychological $1,000 level would make almost all the bulls throw in the towel, which would then see the final sellers move out of the market, thereby creating a lasting bottom to this 4+ year correction.  Yes, this is how markets normally work . . . except when this is what a large segment of the market expects.  

And, the “below-1k-dip-buyers” class has grown quite large.  In fact, if you discount the gold bulls and the gold haters, all you have left are the “below-1k-dip-buyers.”  Right now, I think the rarest breed of all are those willing to buy between $1,000-$1,100.  And, they may actually turn out to be right.

After much contemplation, all of this has placed me in a FOMO (fear of missing out) status at the last lows.  What that means is that I have bifurcated the cash I have designated for gold purchases within both the “below-1k-dip-buyers” camp and the more rare breed willing to buy within the $1,000-$1,1100 region.  

Also, remember that almost 3 years ago, I set the following long term downside targets for GLD (98-105), silver (12.75-14), HUI (100 region) and GDX (9.61-13.21) at which I would begin to be a buyer in this complex.  Each of those charts has now struck my long term target zones, albeit the top of those zones.  And, recognize that the target for GLD resides within the $1,000-$1,100 region.  But, as I noted over 4 years ago, the market may see an emotional over-reaction on a break down below $1,000 which can take is down as low as the $700-$800 region.

Now, understand that these targets I put out 3 years ago were not guaranteed lows, but, rather, were minimal targets the market would attain before a bottom may be confirmed. So, at this point in time, we have struck the minimal targets I set several years ago as to where we should look for the market having bottomed.   But, ideally, I still think that one more lower low can be seen and, at this point in time, I still have no confirmation that a final bottom has been struck.

Yet, due to the significant growth of the “below-1k-dip-buyers,” I have begun buying long term positions in all segments within this complex once we struck the top of my target zones in the GLD, silver, and GDX.  But, at this point in time I do not have anything confirming that the lows are in place.  

So, as those in our Trading Room at Elliottwavetrader.net know all too well, I have created my own class of investor within this market: the “FOMO-but-hedged” investor.  For those that have joined me in this category, my perspective had me buying (a few weeks ago) my first tranche of gold since selling in 2011.  But, we are looking to hedge those long positions on a set up to the lower lows we really want to see.  Hence, I welcome all those that have joined me to the newly formed “FOMO-but-hedged” club. 

********

And, for those that would like to join our 3X MINER ETF club, you can trade with Larry White, who has returns in 2015 exceeding 150%, and will provide you with specific entries and exits for these trading vehicles at Elliottwavetrader.net.  So, feel free to join us for a 2 week free trial.

By Avi Gilburt
Elliottwavetrader.net