As gold usually leads the stock market by a few days, we should see the stock market put in its yearly cycle low sometime in the next several days. However the outlook for stocks is not as bright as the commodity sector. While I do think continued currency debasement will probably drive the stock market to at least marginal new highs I also think an increasing inflationary environment is going to compress profit margins and constrict consumer spending. After a long topping process the stock market and economy will probably roll over and follow the dollar down into that 2014 bottom. 

While I'm not ruling out one more quick dip below $1523 to wash out stops below that technical level, I think gold is in the initial stages of the next leg of the secular bull market. This last C-wave from 2009 - 2011 generated the C-wave of silver with a 400%+ gain at the parabola top in May of last year.  

This next C-wave will be the C-wave of the mining stocks. During the irrational selling over the last eight months mining stocks have reached levels of undervaluation that have only been seen one other time in history (2008). That drove a 300% rally over the next two years. 

I suspect we will see something similar or even larger as the market gets busy correcting this irrational undervaluation. 

I think we are at, or very close to what is likely to be a once or twice a decade opportunity in the metals sector, especially the mining stocks.

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-- Posted Friday, 18 May 2012 | Digg This Article