The irony about the current gold market is that gold is actually slightly higher than it was two years ago in June 2013 when it made a crash low. But many gold market pundits and the financial media have maintained their bearishness on gold for two years, predicting another crash in gold that simply hasn't come to pass. The reason they've maintained this popular bearish view is the gold market, devoid of hope for years, is now in the depression phase. This bottom is where people give up hope fully.
What's interesting though, is that the "point of maximum financial opportunity" is also the point at which people have given up on an investment. This key to realize when looking for big long term trades: when people give up on or stop caring about an investment, they are no longer bidding up its price. So, when fundamentals eventually turn around for an investment that nobody is interested in, it creates an explosive opportunity for when demand kicks back in.
From a Stage Analysis perspective we can visualize the depression phase of an investment as a Stage 1 base. This is where hope is abandoned for an investment and supply and demand settle into balance at a low price, after a bear market Stage 4 decline.
One thing that needs to be emphasized is that the Stage 1 basing phase can last for a long time, from months to multiple years. This is what has plagued some of those looking for a turnaround in gold over the last couple of years. In 2014, for instance, gold attempted multiple times to break out into a Stage 2 advance, but each attempt failed and gold continued to drift. Each failed attempt disheartens the bulls and continues to plunge an increasing number of investors into giving up. This is what eventually causes a super buying opportunity once the real Stage 2 breakout finally materializes. This is why larger bases increase potential for a big trade: the bulls have been washed out of the investment.
You can see on the chart below that gold has spent a lot of time since 2013 in a basing phase, but each breakout has failed so far. The parabolic advance in the U.S. dollar that started in mid-2014 actually plunged gold into another minor decline. But gold has reestablished a Stage 1 base, even with the dollar continuing to surge. Now gold is once again threatening the 30-week moving average with potential to move into a new Stage 2 advance.
What lends support that this upcoming Stage 2 breakout in gold could be the "real deal" is that gold has broken out into a new Stage 2 bull market in foreign currencies. This underlying strength in gold has been masked by a mania in U.S. dollar, but foreign holders of gold are already experiencing a new bull trend.