Gold Forecast: Calm Before The Storm

The gold price failed to breakdown last week as expected and forecast. Despite the relative strength of gold in the last few weeks, we cannot make a case for it breaking out from its current range. As we have maintained for many months, we are still of the opinion that the most probable outcome for gold is lower prices.

At this stage we cannot change our bearish stance. The bulls would have to inject a great deal more energy in to the market to overcome the mounting resistance in the $1200 - $1300 range. We still maintain that gold is currently finishing off a long-term bear market consolidation…and is in the process of resuming this bear market and heading to new multi-year lows.

We do believe that our timing is the problem rather than direction of movement. For the bulls,  the best we can offer is that our longer-term forecasts are looking for a turn soon in terms of time rather than price. Our longer-term fractal projections are expecting a new bull market to begin. In the next few months our expectations from analysis of previous patterns still suggest a final capitulation.

As long-term bulls with an understanding of the many fundamental factors driving the price of gold, we see a massive bull market in the years ahead, driven by the actions of Governments and Central Bankers and their addiction to debt. Sadly, to this point, it is not a tale that is resonating with the majority of the investment community chasing insanely low yields and misunderstanding the associated risks.

Patience and an open mind are still required for the next few months, until we see genuine evidence that gold is either an extreme value play (still our preferred scenario), or it has gained enough energy to start to breakout in the months ahead. Either way, we are looking for evidence that sentiment is changing rather than concentrating on the great story that will inevitably drive prices far higher.

Stay tuned as we try to navigate through stormy waters over the next few fascinating months using logic and probability to stay on the right side of sentiment. We believe patience will be rewarded and in the years ahead many investors will wish they had been paying attention to gold over this summer as the fundamental story gains traction throughout the investment story.

When, in a few years time, every man and his dog is telling you to buy gold because of the huge global overhang of debt and the reckless actions of Governments and Central Bankers, you can smile, thank them for their advice and think about selling up for another value play. As you know, we have been nowhere near such market sentiment since the very late seventies – yet!

********

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