Gold Forecast: The Path Of Least Resistance

The Gold price fell last week as forecast.  It is beginning to look weak -- and anyone with a bullish bias should be concerned at its lacklustre performance over the last couple of weeks. In view of this, we forecasted a much larger decline  than we actually got. Nonetheless, we still believe we are in a bearish continuation and that our timing is slightly off.

Like nature, we think prices tend to take the path of least resistance. Likewise in the case of gold at present, it appears the path of least resistance is unfortunately down. We can see very little to be positive about at this stage. Therefore, we are still forecasting a fall in gold -- as that is where we think the balance of probability lies.

Just as a river does not go from the mountain to the sea in a straight line, nor do prices as they too are also a part of nature. The market itself is a collection of participants, prices are made at the margin between buyer and seller on a daily basis, the market has its own character which is separate to the individual participants. Just as a colony of termites can create structures far in excess of the capacity of each of its individual participants so the collective actions of all gold buyers and sellers creates its own character and structure.

 The stream will take the path of least resistance, when it comes across immovable objects in its way it side steps the object and continues on its course. Like a stream gold has just been hitting a rock for well over a year and there seems no way to force price above the $1,200 - $1,300 region.

There seems no option but to go around the price obstacle which in our view means a capitulation that generates an extreme value play, this would then create the energy required to blast back through this area at some point in the not too distant future. Investors who wouldn’t buy at current prices before, would buy in as they would be fearful they had missed the bottom.

“Public sentiment is everything. With public sentiment nothing can fail. Without it nothing can succeed.”  -- Abraham Lincoln

The bulls will need a substantial change in sentiment to change the fortunes of the precious metals complex in general. Currently, the gold price is an under-owned and unappreciated asset -- and there seems little appetite amongst investors to re-evaluate their portfolios.

Moreover, it is well worth remembering that economic crises are always really political crises. And with the level of economic literacy prevailing amongst our ruling elites, it can only be a matter of time before they drop the ball again and force another substantial rise in the price of gold. 

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To view our unique multi-timeframe gold price forecasts visit us at: http://www.kenticehurst.com/forecasts