Are We or Are We Not in a New Gold Bull Market?

Technical analyst Jack Chan has examined the charts and says that if we are in a new bull market, prices in both gold and gold equities should begin to pull back and consolidate soon.

As suggested in our previous analysis, we need to see a couple of things happening in order to welcome a potential new bull market:

#1. COT data to return to bull market values.
#2. Gold price to exceed the 2015 high at $1,302.

Nobody can predict when this will happen, but we can prepare by looking at the past bull and bear markets so that we can recognize a new bull market if and when it materializes.

The Bear Market From 1981 to 2001

Gold Spot Price

After topping above $700 in 1981, gold lost more than half of its value in just over a year, followed by two sharp bear market rallies, and then died a slow death over the next 12 years.

Gold and Silver Index XAU

Gold stocks as represented by $XAU had two bear market rallies during that 20-year bear market, with both rallies gaining over 100%.

The Bull Market From 2001

Gold Spot Price

The bull market in gold, which began in 2001, did not start with a price spike. In fact, rallies were followed by sharp pullbacks and multi-month consolidations, which are signatures of a bull market.

NYSE.Arca Gold BUGS Index

Gold stocks as represented by $HUI did the same. In fact, the initial rally gained about 100% and was followed by a multi-month consolidation. And this same pattern went on continuously throughout the bull market.

The Gold Market Now

Gold Spot Price

So far we have a 20% price spike in gold, with no correction/consolidation yet.

HUI Gold BUGS Index

Gold stocks as represented by $HUI have spiked up 100% with no pullback.

Summary
If we are in a new bull market, prices in both gold and gold stocks should begin to pull back and consolidate soon.
If we are still in a bear market, then prices can push somewhat higher, followed by a sharp decline, losing all of its gain or more.
I remain patient and wait for the market to tip its hand.

Jack Chan is the editor of Simply Profits at www.simplyprofits.org, established in 2006. Chan bought his first mining stock, Hoko Exploration, in 1979, and has been active in the markets for the past 37 years. Technical analysis has helped him filter out the noise and focus on the when, and leave the why to the fundamental analysts. His proprietary trading models have enabled him to identify the NASDAQ top in 2000, the new gold bull market in 2001, the stock market top in 2007, and the U.S. dollar bottom in 2011.

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Disclosure:
1) Statement and opinions expressed are the opinions of Jack Chan and not of Streetwise Reports or its officers. Jack Chan is wholly responsible for the validity of the statements. Streetwise Reports was not involved in any aspect of the article preparation or editing so the author could speak independently about the sector. Jack Chan was not paid by Streetwise Reports LLC for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
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All charts courtesy of Jack Chan.

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5 thoughts on “Are We or Are We Not in a New Gold Bull Market?

  1. if we look at the market per se and consider all the huge overheads and debt of mining companies and set that aside and compare annual production and industrial and commercial use, then rapid price movements are caused by speculators who push and pull away from the equlibrium of demand and supply. Agreed, a correction is due now and maybe today friday there will be profit-taking. But the underlying spec motives arise from a whole complex of issues; like weakness in US equities, and USD retracement. i do not think 2016 will set itself up as the year of commodities which tend to move in a group. therefore a snap back is due and caution advised for the longs.

  2. Are we or are we not? this question is quite interesting, and perhaps, without any sure answer, at list, as far as short or intermediate trend is concern. However, if we check long term or primary trend, then the are we not? is more probable then the are we? Now game is caught between $ 1180 and $ 1345 one more sure thing is how long it take to cross this consolidation, and if it lasts for a considerably long term, then the break-out of either side will taken place rapidly, without giving any chance to traders as well investors too. so every possibilities depended upon "bellow $ 1180 " or "above $ 1345"

  3. How does T/A mean a darn thing in a now admittedly rigged market. Mining shares have been so beaten down (80%-90%) over the last 5 years, we may not see those lows of 2015 again in our life times. Good miners are just profitable corporations reporting quarterly like any other, plus they are a great hedge in these globally turbulent times. Traditionally and especially prior to 2008 miners have always been part of ones portfolio, they have not even reached up to the levels they fell to in the 2008-09 crash with gold at $750! IMO with 3.5 Trillion printed, gold at $1250 and Dow at 18,000 miners should be trading well above those said levels to even be close to fairly valued.

    1. Technical analysis SHINES in a rigged market because only T/A does not question why something is going up or down. Take a stock like Bre-Ex. It was a complete fraud that went from $0.10 to over $200/share. Followers of T/A made a fortune on the way up and a fortune on the way down. Fundamentalists, however, completed their analysis based on a fraudulent $6 billion worth of gold and called it a buy at $200 -- and lost their shirts.

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