It’s been a long drawn out corrective affair with the precious metals since the August-September 2011 top that seems so long ago right now. During that last spike period where Gold rallied to just over $1900 per ounce, we had mentioned many times in articles and to our subscribers that GOLD was likely peaking in a wave 3 of excitement and high powered bullish sentiment. The “tells” were the articles, the CNBC mentions, the daily “CNBC GOLD” ticker at the top of their screen, and the cover of a major magazine.

Since that time, we believe GOLD has been consolidating in what we term a “wave 4” correction, which is a milder version than some others. This is part and parcel of a 5 wave rally pattern and wave 4 is necessary to cool the engines of overbought sentiment and public love of the metals. These wave 4 patterns can take many forms and shapes, but this one appears to be an irregular ABC Version which we have outlined below on the weekly chart views. The length of period of time is nearing 18 months in total, but the lows in the 1550’s were already marking price bottom territories, and now it seems more of a matter of time before we see wave 5 up really take off.

This means that Gold and Silver Exploration stocks are very cheap as well, because the senior producers are seeing their stockpiles whittled away while their grades deteriorate at the same time. Once GOLD pops over $1750 per ounce we should see a rally in all the Gold Stocks, but especially in the exploration plays, which are historically undervalued here. Take a look at our GDJX Junior Exploration Stocks chart at the bottom of this article as well. It will need some help to break the downtrend, but again we think the odds are in the savvy investors favor to speculate on a select few in this sector.

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Dave Banister

CIO-Founder
Active Trading Partners, LLC
www.ActiveTradingPartners.com
TheMarketTrendForecast.com

Dave Banister is the Chief Investment Strategist and commentator for ActiveTradingPartners.com. David has written numerous market forecast articles on various sites (321Gold.com, Gold-Eagle.com, TheStreet.Com etc. ) that have proven to be extremely accurate at major junctures.

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisor.

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