Gold sellers are gone and the buyers are scant. We believe the bottom is in and a rebound should begin very soon. However, we are more concerned with what will be the driving force for a sustainable rebound that will evolve into a new cyclical bull market.
In early November we made the case that precious metals were in danger of a final plunge before a bottom. The decline that ensued has abated in recent days, and it appears that a short-term rally is underway. The bear market is very close to ending but we can’t say definitively just yet.
Over the past several weeks, gold and silver stocks failed to break lower despite the negative sentiment and the prevalence of tax loss selling. While we aren’t sure if gold has bottomed, we think odds are strong that the stocks have bottomed.