Gold Fell Deeper Into a Bear Market. What's the Outlook Now?

By Pamela and MaryAnne Aden

Those of you who have read our newsletter of the years are very familiar with Pamela and MaryAnne Aden. For years they have done an excellent job of analyzing and interpreting the precious metals and foreign currency markets through their highly recommended publication the Aden Forecast (link).

Michael and I recently met up with the Aden sisters at the New Orleans investment conference. I had a chance to participate in their workshop and I was impressed by their chart showing the phases of gold. I asked and they happily agreed to share this chart and their analysis of it with you.

-Rich Checkan

Gold has been depressed since September 2011 when it reached its last record high. It's been under pressure for over three years now, yet it was also building a base above $1,180 for the last 16 months.

That is, until it was clearly broken in late October. Gold fell sharply, triggering a second leg down in the bear market. The bear market is alive and well, and it's now going to take time for gold to stabilize and adjust.

The dollar also soared. But with much of its strength coming from a weak euro and yen, this gave the Dollar a free pass as a safe haven.

Gold ended its first back to back monthly decline of 2014 in September and October, which makes many wonder about gold's outlook.

We believe gold is eventually going higher. If you ask us what gold will be doing in two years, we'd say it's more likely to be on an upward path.

When looking at gold's big picture since 1967, you can see on the chart that gold has phases. And impressively they continue to work.

Note on the chart that gold has formed a bottom area every 7-8 years since 1969. It's also formed a major high area every 11 years since then.

The 7-8 year low areas are in red. November 2008 was the last low time which was the 5th time since 1969. If a similar time period occurs going forward, the next low for gold could be any time and up to a year from now.

The point is the cyclical low time period is getting closer. And more exciting is what happens thereafter. Once the low is clearly established, then 2019 will be the next likely time for a major peak. This would be the 11 year mark for the 4th time in 45 years.

With today's world in an unprecedented condition, we'll likely see gold at super new record highs. And we believe it's time to have some patience.