Get Ready To Buy More Gold



Photographer: Dario Pignatelli/Bloomberg

© 2016 Bloomberg Finance LP

The metal price is likely to make one more low to trace out an A-B-C correction. There are two reasons to expect an upturn. The dynamic monthly cycle in Chart 1 bottoms at the end of this month, and September (Chart 2) is the most bullish month in terms of both percent up (58%) and in terms of average return (1.7%). Thus, the monthly cycle will be rising with strong seasonality adding to the upside momentum. Gold is likely to commence a rally at the end of this month into November-December as depicted in Chart 3. Sentiment is confirming this outlook by collapsing from excessive optimism at the last high to neutral now. This has been the one of the largest sentiment drops on record. This tells us that gold holders are not that confident in a continuation of the gold rally. Like dispirited infantry in a Napoleonic battle, they flee at the sight of the approaching Imperial Guard.  Applying contrary opinion, this is a bullish development. The $1750 area is probably the maximum extent of the correction. The upside target is in the $2250 area.

Chart 1-Gold Monthly Cycle


The monthly gold cycle is bottoming late this week.

Cycles Research Investments LLC

Chart 2-Monthly Expected Return- Gold


Seasonality is favorable for the gold bulls.

Cycles Research Investments LLC

Chart 3-Gold Monthly Cycle (Expanded View)


The monthly cycle peaks late in the year.

Cycles Research Investments LLC

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