Last week we put out a chart
that may have scared some investors. We stated that a gold pullback was
imminent and we could expect the Gold BUGS Index to lose another 14% in gold
miners before markets stabilize. In just three days, we have lost another 3% –
this rapid decline is unprecedented as investors were already hesitant about
golds enormous rally.
The pullback coincides almost perfectly with the Feds
expected increase in interest rates, signaling a deteriorating labour market in
the US. This will likely exert upward pressure on inflation, reinforcing the
case for higher rates.
But we will be maintaining the course. This pullback is
healthy and expected and every gold bull market in the past has experienced
this sort of oscillation. The fact that we just exited one of the longest bear
markets means we may be in for one of the longest and most substantial bulls
ever. Let’s revisit this bull analog chart we have published before, with the
help from our good friend Jordan Roy-Byrne from www.thedailygold.com.
The current pullback is minute compared to ones experienced
in full-fledged bull markets. And as we mentioned previously, selling now to
avoid a possible 10% decline seems like a risky bet. We would rather hold for
the long-term; using the 2001-2008 gold bull as proxy, this rally can last
until 2023.
Believe in the thesis and do not get shaken out.
For more charts, articles, and reports, check-out our website: http://www.palisade-research.com/
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