Stocks are pulling back in preparation for one final mind-blowing surge to top off this five-year bull market. Gold, on the other hand, looks like it is setting up for a final bear market capitulation phase where every gold bug finally throws up their hands in disgust and jumps over to the stock market right as it’s putting in a final bubble top. For those…that are sitting in cash, this final capitulation is going to represent one of the greatest buying opportunities of this generation.
So says “Toby Connor” (goldscents.com) in edited excerpts from his original article* entitled FINAL BUBBLE PHASE FOR THE STOCK MARKET: FINAL CAPITULATION FOR GOLD.
[The following article is presented by Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), the FREE Market Intelligence Report newsletter and may have been edited ([ ]), abridged (…) and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. This paragraph must be included in any article re-posting to avoid copyright infringement.]
Connor goes on to say in further edited excerpts:
We’ve had so many calls for a crash over the last year that you just know the bears are salivating right now thinking they are finally going to get their wish. However, I don’t think we can have a crash in the stock market until we complete a true parabolic structure. Notice in the chart below that during the final parabolic move in 2000 the NASDAQ had two back-to-back 10% corrections, one of them unfolding in only three days and completing what looked like at the time a double top. The shorts that jumped in at the bottom of that second 10% correction then got absolutely destroyed over the next six weeks as the tech sector proceeded to rally 34%.
We saw a very similar pattern during oil’s parabolic advance in 2008 – two very convincing 10% corrections followed by a 5 to 6 week surge into a final top.
It’s now been a year since gold broke through that $1520 support zone and gold has yet to ignite a new bull market move.
- We’ve had two very convincing bear market rallies but both have rolled over at that same $1400 level.
- This has probably so demoralized precious metal investors that when we get our next test of that sub $1200 level later this month there just aren’t going to be any buyers left to defend that level.
- A third test of that support will almost certainly end in a break and final violent capitulation down to the next support zone at the 2008 high a little above $1000.
Gold Producer Stocks
As gut wrenching as it is for me to say this, this final capitulation will probably shave another 30-50% off of the mining stocks and bankrupt many of the juniors. At that point those investors that have available cash will get the third great buying opportunity of this secular bull market. The first two, [in 2001 and 200o, see charts below] delivered amazing gains as they came out of their bear market bottoms.
For those that have the mental fortitude to buy at the impending bottom when it looks like the entire sector is going to collapse forever, this is where millionaires and billionaires will be made.
[Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.]
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