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Preparing for THE Bottom: Part 1 - Gold

 -- Published: Tuesday, 30 May 2017 | Print  | Disqus 

If we look at gold from the long-term perspective, itís clear that it hasnít really done much in the recent months Ė itís trading in the $1,200 - $1,250 range, which is where it was in the first half of 2016, first half of 2015, for most of 2014 and in the second half of 2013. Overall, despite short-term and medium-term price swings, not much has happened in the past few years.


Since the bull market in gold started over 15 years ago, we havenít seen such a long consolidation pattern Ė ever. Even the big 2008 plunge was followed by a rally almost immediately (from the long-term point of view, that is). The gold volatility index confirms the above having recently moved to new all-time lows (itís been published for only several years, but still, thatís an important observation). Please take a look below for details (chart courtesy of


Goldís Declining Volatility


Now, what does the above (lack of) volatility mean? That the gold market is less and less appealing to traders and investors Ė at least to those, who donít believe in the gold marketís strong long-term fundamentals. Itís less exciting and some might even describe it as boring.


But, is this really the time when one should take it easy, stop checking whatís going on in the gold market and wait for goldís rally? If one wants to miss the event that will likely be called the mother of all buying opportunities, then this is the way to go. Something tells us that you donít really want to miss something like that.


The biggest mistake that people make in a street fight is that they donít realize that they are in a fight. Paraphrasing the above and applying it to investments: the biggest mistake that investors make is that they donít realize that the best time to buy is when nobody wants to and when a given asset is widely hated. Itís ironic that the same reason for which people donít want to buy a given asset is the same reason that creates the great buying opportunity, but still, this is the case.


By the way, this phrase has its own trading indicator Ė the Bollinger Bands Ė when the bands narrow, it suggests that a big move is just around the corner. The space between the bands depends on the volatility. So, low volatility (the calm) suggest a looming big move (the storm).


We donít want to discuss why the final bottom in the precious metals sector is still ahead of us or to make a specific gold price prediction, as thatís not the point of this article and because thatís something that we discussed many times in our previous articles (however, the fact that gold was not widely hated when it moved below $1,100 in 2015 is one of the things that point to the above conclusion).


Goldís Not Doing Much Ė Why Bother?


The purpose of this essay (the first one in the ďPreparing for the BottomĒ series) is to emphasize the need to stay alert when times are not turbulent, but boring. The calm before the storm is exactly how we can view the current ďboring stageĒ of the long-term bull market in precious metals. This is precisely what happens before extremely profitable buying opportunities and it seems that now is exactly the wrong time to give up on this market. Instead, itís the time to prepare for the punch that the precious metals market is likely to give all investors in the coming months and make sure that one has a plan to use it profitably instead of being hurt by it. Naturally, it all comes down to preparing NOW, before the volatility kicks in as it will be difficult to keep oneís head cool in that environment without being prepared in advance.


In the following articles, we will discuss the planning process and preparations in greater detail, but for now, the bottom line is this: be sure to stay alert and focused on the precious metals market even though it may not appear all that interesting at this time and prepare for the big moves that are likely to be seen later this year. This time investment should prove extremely worth your while.


Thank you.


Przemyslaw Radomski, CFA

Founder, Editor-in-chief, Gold & Silver Fund Manager

Sunshine Profits



* * * * *


All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.


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