Stop The Insanity As Misinformation About Gold Continues To Reign

Elliot Wave Technical Analyst & author @ Elliott Wave Trader
November 29, 2015

Ben Franklin used to say that “pain instructs.”  But, based upon the continued unjustified faith by investors in what has been published these last 4 years as “analysis,” I am not so certain this maxim has application within the metals world.

I will apologize up front to those who may be insulted by what I am about to say, but I think it needs to be said, as many in this market need a reality check:  Why is it that most who are followed in the metals market and viewed by many as “experts” are so horribly wrong week after week, yet continue to present the same analysis week after week?  Are the majority of the participants in this complex really that foolish to continually follow such clearly erroneous perspectives with the “hope” that it will eventually be right?

First, I want to start by saying that, yes, this 4+ year correction will conclude soon.  So, this market will begin another bull market in the not too distant future. You see, markets, over the very long-term, will continue to rise, as society continues to progress throughout history.  So, there is no special analysis needed to expect the market to turn around and head to new all-time highs.  The truly valuable analysis comes in when one wants to know when the corrections within the larger degree uptrend will occur, so that an investor can take advantage of price improvement.

Second, I want to reiterate that none of what has been cited as “catalysts” in this market for 4 years has meant anything to the price action, yet many continue to cheer this drivel posted week after week as gospel.  So, this market really makes me scratch my head and view the masses as truly delusional.

But, there are a few that have begun to see the light.  This past week, I did see the following comment posted, which tells me that at least some people are starting to understand, but it does not seem as though they have completely put 1+1 together yet to get 2:

“Gold has not been making sense for over 2 years. Gold moves against all fundamental factors, high physical demand, lower production, war, etc. More bullish it gets, more gold is whacked.”

Even Bill Murphy of GATA recently recognized that “[n]o amount of quantitative easing anywhere in the world has done the price of gold any good. Neither have near-zero interest rates. Nor has enormous physical demand from India and China. Nor the staggering debt in the United States. Nor a race to the bottom in many currencies.”

Nonetheless, many have continued down their delusional paths, ignoring the last 4 years of price action, and repeating their mantra with different news events supposedly supporting their perspective.  But, news or fundamentals have not been the driver of this market, and some have finally begun to recognize it.

Yet, this past week, I read about how Russia will now be the catalyst to “unveil” all that is wrong with the economic system, which will then supposedly cause gold to rally to the moon.  I then read yet another article about the impending collapse of the COMEX, which will also send gold prices to the moon.  And, I even read an article that suggested that the ECB QE will cause gold to rally to the moon (despite the fact that the metals tanked with the US QE3).

In fact, I have heard story after story, along with a myriad of fundamentals, presented like these for 4 years, and none of it has had any impact upon the price of gold, other than see it continue to drop lower and lower despite these revelations. You would think some would begin to develop a “Costanza complex,” wherein they begin to do the exact opposite of what they think is right in order to align themselves with the correct side of the market.

Despite these earth shattering revelations (which were supposed to be bullish for metals), gold has lost almost 50% of its value, and silver has lost approximately 75% of its value.  Yet, people continue to present these useless perspectives as gospel, and many more continue to believe them.  Eventually they will be viewed as aligning with price when the market finally bottoms and turns up.  But, does it mean that the analysis correctly predicted the direction of the price of the market? Anyone ever hear of the “broken clock” syndrome? 

Fundamentals will eventually be aligned with price, but that will not then suggest they are the driver of price . . .  that is, if you are intellectually honest.  If they did not drive the price all the time, then it is not logical to assume that they only drive price some of the time.  One cannot be partially pregnant.

Folks, belief in fundamentals, physical demand, production, war, etc. have not and will not provide you insight into the turning point for gold.  Gold will not bottom until the sentiment for it has gotten so bad that it will have only one way left to go.  That is simply how markets work.  Period.  End of story.   No exogenous event or fundamentals will change that, and if you have not learned that the hard way over the last 4 years, then there is truly no hope for you, or anyone you chose to follow.  Yes, I know some of you will view me as harsh, but someone has to sound the wake-up call for the zombies that populate this market.

Gold is a slave to market sentiment just like any other asset on the face of this planet.  Whether you want to look at it as real money or not, whether you want to believe the “experts” or not, or whether you have bought the load of goods about a market dropping 50-75% on “manipulation,” nothing will change the fact that it is sentiment and sentiment alone that has controlled and will continue to control the direction of gold.   

And, as far as sentiment is concerned, we are finally approaching extreme enough levels of negative sentiment which will mark the conclusion to this 4+ year correction.  So, when we do begin the bull market again, please do not forget what these 4 years should have taught you about the rubbish that has been propagated by supposed metals “gurus” who have been calling for a bottom each week for 4 years.  They will unlikely be able to prepare you for the next market correction which will occur several years down the road.  Yet, astoundingly, I can assure you they will claim victory very soon, and many will again be certain that fundamentals drive this market . . . until the next correction ensues.


Courtesy of

Avi Gilburt is a widely followed Elliott Wave technical analyst and author of, a live Trading Room featuring his intraday market analysis (including emini S&P500, metals, oil, USD & VXX), interactive member-analyst forum, and detailed library of Elliott Wave education. You can contact Avi at: [email protected].

The California Gold Rush began on January 24, 1848 when gold was found by James W. Marshall at Sutter's Mill in Coloma.
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