There has been so much talk about gold and so little understanding of the reality behind the move in the price of the yellow metal over the last 90 plus days that I think it’s necessary to separate the wheat from the chaff. I want to discuss what gold has done, where it’s at now, and then end with where it’s going from here and postulate why it’s going to do what it will do. Words: 1083

So says Giuseppe L. Borrelli (www.unpuncturedcycle.com) in edited excerpts from his original article*.

 Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) and www.munKNEE.com (Your Key to Making Money!) has edited ([ ]), abridged (…) and reformatted (some sub-titles and bold/italics emphases) the article below for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement.

Borrelli goes on to say, in part:

Gold in a Major Bull Market

Gold is beginning the twelfth year of major bull market; perhaps the most unprecedented bull market in our lifetime. [Below is] a quick snapshot of what that bull market has looked like since the 1999 bottom and the 2001 retest of that bottom. From the point of view, as an investor, this is about as beautiful as it gets.

Gold has posted gains in each and every year [of its bull market run]. Below I have listed gold’s closing price on the last day of each year:

2000 — $273.60
2001 — $279.00
2002 — $348.20
2003 — $416.10
2004 — $438.40
2005 — $518.90
2006 — $638.00
2007 — $838.00
2008 — $889.00
2009 — $1096.50
2010 — $1421.40
2011 — $1566.80

Gold Price Corrections

Now I want to look at the same time period but from a different perspective, this time in terms of corrections, because every primary bull market of any duration experiences secondary corrections. Every significant move in price has reactions and there is no way around it; you just have to be smart enough to recognize it for what it is, a reaction, and sit tight. So here it is:

Gold Has Bottomed In Price

If you include the current reaction, the eleven year old bull market is now in its seventh correction and the previous six have run anywhere from 12.1% on the low side to 28.9% on the high side. The current reaction that has led to all the negative rhetoric is stuck right in the middle at 17.2% and yet the media trips over itself to call a top, just like they did the other six times. I would like to point out that they were wrong then and they are even more wrong now, if that’s possible, and here is why.

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[Below] I have drawn a very simple nine-month daily chart of gold and I’ve put in the only two lines that matter. The top line is downward sloping and represents resistance while the bottom line is also downward sloping and represents support…:

One of the reasons I believe we’ve seen the bottom has to do with the 90-day cycle, one of the most dominant cycle’s in the markets over the last decade. Gold topped with an all-time closing high of 1,900.60 on August 22nd and then declined to a closing low of 1,548.70 exactly ninety days later. That in my opinion is not a coincidence. Since then gold has rallied to [in excess of $1,700/ozt.].

COMEX Days Are Numbered

Perhaps the most important development in the world of gold has to do with the fact that China, one of the world’s largest importers of gold, is no longer content to buy their precious metal [on] the floor of the COMEX or London metals exchange. Why? There are two principal reasons:

I should mention that a number of larger players, like Sprott and Kyle Bass, are following in China’s footsteps and are now going straight to all the large mining companies and are inking deals to buy all their production right from the source! That means that the flow of physical into the COMEX will slow to a trickle and eventually dry up altogether and the end result will be a default by the COMEX and a collapse of the paper system.

Price of Gold Has Not Topped

Finally, all of those calling for an end to the gold bull market seem to forget one important thing. All major bull markets end with a spike up based on greed and euphoria and not a top molded out of fear and despair, as would be the case today…

Gold has not topped…and if I am right that the bottom is in then we are about to embark on the third and final phase of our bull market, and that’s the phase where the general public finally piles into the gold market. It is almost always the most lucrative phase and it is the phase that always caps a major bull market.

Conclusion

The third phase will take gold up and through US $4,000 with fewer interruptions than most could imagine. My advice is to buy gold (silver) here and hide it some place until all the smoke clears.

*http://www.top40goldstocks.com/article-Gold-Bottom-Targets-Trend-To-4,000.html

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