Gold Forecast: Gold Fails Despite Global Turmoil

So last week to the surprise of many…and in spite of an impending Greek default (or arrears as a default has now been renamed!) gold ended the week down. This was in line with our forecast published every Sunday before the markets open. We have maintained our consistently bearish position for some time now. Our expectation had been that June would be a bad month for the bulls -- and so it transpired.

June was a negative month for gold with a fall of over 1%.  The fall we have been focussing on for months is underway; however it is not falling quite as we expected. Consequently,  this is beginning to have some significant effects on our longer-term forecast.

We have always maintained that focusing on news events does not help to make rational investment or trading decisions. It is human nature to give some events more significance than others. Whether it is trading Fed meetings or jobs numbers, these news events create a great deal of noise for the financial media…and profit for certain parts of the financial services industries that actively encourage individuals to enter trades  based on the supposed significance of these events.

In the last few months we have had Ukraine, Greece and the Swiss Franc peg amongst a host of other news events all of which we were assured would be gold positive. However,  gold has continued to maintain its downward course through all these events. It has in our opinion proved that the general noise of central bankers, sabre rattling politicians and manipulated economic data presentations should be roundly ignored. Private investors and traders should take the day off instead of wasting their money on such noisy events.

The gold market had already factored in these events. They are not black swans…meaning they were not unpredictable events. Whilst they came as a surprise to many, they were well-known to the market itself. The Swiss Franc peg was never sustainable. Moreover, Greece has been in obvious financial difficulty for some time. Furthermore, the west has been desperate to isolate Russia through Ukraine for a number of years.

We believe markets will move through phases over multiple timeframes, regardless of the news events that the mainstream financial media will focus on to maintain their ratings and fill their advertisers’ coffers. The tail does not wag the dog…and central bankers and politicians are as likely to be kept awake at night by the might of the market as any investor or trader.

For us to turn bullish we must have evidence that the market structure of the last few years has changed, which is how we work.  We will not change our minds from week to week.   It is simply impossible for a market structure to logically change that quickly.

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