What’s with gold, with the Dow?

Larry Edelson

To most investors, gold this month was just as surprising as the Trump win. After making a near perfect cycle low at roughly the $1,242 level on October 7 — that I forecast right on cue in accordance with my AI models … gold rallied sharply, also per my AI model forecast.

But then, last week, gold collapsed, taking out its early October cycle low, falling as low as $1,211 as I pen this column. Silver also tanked, as did the share prices of virtually all mining companies.

Typically, when a cycle low is exceeded in time and price …

In other words, when a new low comes and it’s beyond the forecast date for the original low … and the AI model is forecasting a rally, as it still is …

It’s a sign that a cycle inversion may be occurring. That’s not some fancy term I use when a forecast doesn’t pan out, or is in danger of not panning out. Many have complained that’s my way of not admitting I was wrong.

But it’s quite the contrary. The next “turning point” (read: Cycle low or high) in gold is due in December. That “turning point” can be a high or a low. The question becomes what is the market telling us about the next turning point, not whether or not there will be one.

Another possibility is that the cycles are stretching. In other words, the October 7 low originally forecast is being pushed off by a few days and gold can still snap back and soar into December.

No, I’m not talking out of both sides of my mouth or hedging my bets. I am simply telling you how markets move. They have a hidden pattern to them, and sometimes those patterns are obvious and sometimes they are not. Good analysts recognize that, and adjust their strategy accordingly.

So apart from all this technical jargon, what do I think as a gold trader? Separate and apart from my AI models?

I think gold can test the $1,200 level, perhaps even a tad lower, and then it will rally smartly once again.

The precious metals in general as well as mining shares are deeply oversold, and at a minimum, due for a large bounce. If that bounce gets back above $1,242 in gold — the prior October 7 low — then a cycle inversion can be avoided and gold should be off to the races again into December.

Gold is at a critical turning point.

But if the bounce is weak, then — we all have to face it — gold and other precious metals and miners may be headed even lower, with gold perhaps falling below $1,000 early next year.

Bottom line: Either way, gold is at a critical turning point. A turning point from which I have no doubts it will recover from and ultimately head much higher — to well over $5,000 an ounce come 2020.

Meanwhile, the Dow Industrials have not yet fully broken out to the upside. That requires — as I have said all along — a monthly close above 18,500.

That could come this month or next, or even later in 2017. But until that happens, my work shows the Dow Industrials and all U.S. stocks are on weak ground. So as strong as the market looks, do not jump in with both feet. Not until I give the signal, which of course would go to my members first.

But when it comes, it will be a doozy, for as I have said all along, the Dow Industrials are headed to 31,000+, no matter what the U.S. economy does.

Stay safe and best wishes,

Larry

Larry Edelson, one of the world’s foremost experts on gold and precious metals, is the editor of Real Wealth Report and Supercycle Trader. Larry has called the ups and downs in the gold market time and again. As a result, he is often called upon by the media for his investing views. Larry has been featured on Bloomberg, Reuters and CNBC as well as The New York Times and New York Sun.

Comments 73

Peter November 16, 2016

Larry I do not question your judgement or cycles. But who could possibly have predicted more than 1000 tons of gold being dumped on the futures market when Donald Duck triumphed. It is perfectly clear that the fed and bullion banks destroyed gold and silver. There is absolutley no way a trader would unload a position in this way unless it was to trash the price. So my sympathies to you and all honest investors. Dont fight the fed. UNTIL you see that the Chinese exchanges have indeed cornered the dealing market for real physical gold. It will come but when ?? I detest the fed and cronies for this illegal and abhorent practice. But justice will come. Personally, for what its worth, I reckon gold will bottom at about 1040-60.

Eli November 16, 2016

I think you have it spot on!

Bob Schubring November 16, 2016

Drage Petr: Is possible that all 5 Mexican crime cartels unloaded their gold and bought MXN, yes? They have to stop fighting each other and invest in peace sometime, you see? Trump brings new Treasury Secretary on 21st January, who recovers from party hangover and starts hunting offshore accounts the cartels hold. They have to make deal with Mexican central bank and government now, because US can hunt their money down anywhere else in entire world. So sometime, just happened. No more digging tunnels under prison. No more buying 747-loads of old AK-47's and Semtex from Albanian army warehouse. No more mutilated-body displays to make Mexican people afraid they will vomit if they see picture in newspaper. Must now build factories and put Mexican people back to work, because gang war now over, and last gang to realize that, gets smashed by Mexican Federales and Mexican Army.

Ron November 16, 2016

Hi Peter, Maybe it is simpler than the scenario that you express.. Could it be that Trump winning has shown investors that the US is not getting weaker any more? Could it be that Gold has not dropped in value, but that the Faith in the Dollar has improved? A few futures margin traders may have gotten out before they lost even more ? Could it be that the Asian markets are suffering more as time passes and some Gold Was Sold below market price? Give it a week and the speculators will have switched sides, leaving the Long Term investors with a more stable view... There might also be an exodus from Gold to buy oil at an attractive price... to prepare for an improving US Christmas shopping season... (Bearish on Gold Bullish on Oil) What do I know..? I am just an observer. regards

Peter November 19, 2016

A few margin traders. More than 1000 tons of gold ??? Are you kidding me.

nkpdispr November 19, 2016

I don't think it would have been any difference if Hillary the Lying beast had won.

Peter November 20, 2016

Interesting view. 76.6B in treasuries were also redeemed. China setting upfor rebalance of yuan? Sounds like a squeeze play. India may be the canary in the gold mine,it's minions are controlled by it. The rupee's .01467 value is 7 times that of Indonesia and they are being taken over by the Chinese from within. The new silk road for what purpose??

Abdallah Sulaiman November 16, 2016

I have to admit. You just protected yourself with this article. So it might go high or it might go low. Great analysis.

Como651 November 16, 2016

He's protecting his followers by providing up to date predictions. Now everyone knows a cycle inversion is a very likely possibility. If you don't get out of gold or hedge now you can't blame Larry later. He's warning everyone as soon as possible as the model forecasts change. This is what a good analyst does and does not try to make excuses. My bet is a cycle inversion will happen but I'm still holding my gold mining positions because if I'm wrong I'll miss the breakout. If Larry is correct on the long call it won't matter in a few years unless the price of gold goes so low and for so long it drives mining companies out of business which would send mining ETFs to lows so low you may not recover from even if gold goes to $5000. Everyone needs to cast their bets and not blame Larry. He just calls it like he sees it. Right now Larry says the odds are greater gold will not go through a cycle inversion. No one not even Larry can know for sure.

UDO November 17, 2016

Como651 That what people wrote in 2012 after the high in gold and miners ..." I'm not selling I might miss the breakout " - be smarter this time around . So far many miners lost again 50 % but still up from their lowest level . Do not fall in love with anything that the stock market covers - it can ruin you .

David Hooker November 16, 2016

So should I sell my mining stocks now, or hedge deeply with DGLD? I have already lost 75K with this drop in mining stocks. Just want to make the right moves with this crazy market. Thanks Larry.

David McCance November 16, 2016

This just shows that no one knows where gold and silver are going year to year. You might be able to predict cycle direction over decades. However monthly or yearly It's all just lucky or unlucky guesswork. There are just too many variables.

George Burkhart November 16, 2016

When I look at the red numbers on my brokerage account based on your miners previous buy points it's not a fun experience so I appreciate your updates between newsletters. I am hopeful that you provide your subscribers with some new buys "when the time is right" to average out our buys new and old. We are keeping the faith so keep us informed. Thanks, George

Eli November 16, 2016

Please can you answer a question: How long have you subscribed to Larry's newsletter? Would you say your investments, based on his advice, did better than buying an index tracker?

Lawrence Graves November 16, 2016

Larry, keep telling like it is.

Eric November 16, 2016

The up/down pricing is relative to speculation of what s happening in Washington at the moment.Traders-hedgers recommending running for safety or some believe to make a bundle. OK so it will come down how much volatility and diversified your portfolio is. Hey play a bit in the leveraged funds just remember these funds take a huge amount of your time stay on the positive side. Or if a long term investments, buy low, hold and build in dividend type ETF s of funds.

D Braatz November 16, 2016

Larry: That was a tough note to write. But some of us were starting to do our own current market analysis and were already there. If reserves are cashed in by governments to cover their debts, $1,000 or lower may be in our future. Dick Braatz

carl carlson November 16, 2016

THANKS FOR THE INFO LARRY. AWAITING YOUR BUY SIGNAL ON GOLD GOD BLESS YOU

Karl Hagner November 16, 2016

Hello Mr.Edelson Thanks for your differenciated analysis. That helps! One question moves me: Is it beyond possibilities, that gold will SOON or somewhen be pushed aside from/by/through concerted digital currency operations of governments and bigbanks. Can it be possible, that Gold can be "ignored" this way and investors completely fooled by souch manipulations? Thanks a lot for your impacts and answer! Best! Karl

Wesley November 16, 2016

Larry, Is gold high of 1242 a daily, weekly or monthly close? Thanks, Wesley

Jeanette November 16, 2016

When the tsunami hits the U.S. will the insurance companies holding fixed immediate annuities go bust, too? (Example: New York Life, as endorsed by AARP)

Kenneth Harmon November 16, 2016

Dear Larry, So what happens after DOW ~31,000 and Gold over 5,000 circa 2020/2021. What is your forecast for 2021-2025? Both you and Martin Armstrong have been unusually silent about what happens 5-8 years from now in terms of the various cycles. Does everything collapse come circa 2021plus as a Global crash and Global War obliterates the existing order or is it much more benign that that. As of January 2017 it will be only 4 years till 2021 and you have done 4 plus year looks in the past. Bottom line, what happens after 2020? Thank You

john eastman November 16, 2016

Larry, Your beginning to sound like a central banker?

Old Jack November 16, 2016

"I am simply telling you how markets move." Great comment! They either go up or down and sometimes both. But we won't know until they do.

sharlene November 16, 2016

Larry,Dow is way above 18500 now for the past few days

M November 16, 2016

"a monthly close above 18,500."

Chuck Burton November 16, 2016

So, the markets will do what the markets will do. The best an investor can do is to identify a trend early enough to latch on and ride it. Knowing when to get off is the hard part.

jtmarlin November 16, 2016

This a very informative article Larry. Thanks for laying out the potential scenarios so clearly.

J November 19, 2016

You are clear what to do now??? pkease help me with that!

Wyatt Rushton November 16, 2016

Hi Larry What is your take on the currency restructuring in India causing the reversal of demand for gold from that country just as Donald Trump was declared winner? When do you think India's traditional demand will return? Best regards W

Justin November 16, 2016

Nah, you're just missing the long-term cycle low that is due later this year or early next year. AI models won't find it because of how the mathematics work. You'll just have to get out a long-term chart, a pair of dividers, and find it yourself.

David November 16, 2016

Larry, you didn't mention Silver and your email Alert that Silver needs to hold $17.11 which is hasn't.

M November 16, 2016

I am wondering the same thing. That article seemed rather definite that gold had already reached its pivot point and all that remained necessary for a cycle inversion was a close in the price of silver below $17.11. It closed below $17.11 yesterday. "The semi-good news: Silver has not broken its equivalent October 7 cycle low at $17.11. This non-confirmation is important. If a cycle inversion is taking place, silver too needs to break its October 7 low."

Rosemarie November 16, 2016

Thank you Larry for all your info. I wonder if you could tell us what is happening to oil and do you have any good companies which we might purchase and when? The world is a stressful place as you forecasted. Your advice has been comforting. I look forward to 2020.

$1,000 gold November 16, 2016

oil supply and demand comes in balance next year. the driving season will surely bring higher prices at the gas pump. i say higher dow and lower gold in 2017.

Ron November 16, 2016

Hi $1000 Gold, I wish I could share your optimism about Oil Prices... If Trump succeeds in his plan to be self-sufficient in energy, the US will not be at the mercy of OPEC .. If Oil prices stay low, the push to electric and hybrid cars may taper off.. If Subsidies to Elon Musk end, will the electric car survive on it's own merits? If the Electric car is not paying Road Tax in the Price of Gasoline, where will the government get it's cut... Subsidies allow you to charge your electric car for FREE.. (Not Fair to Pick winners this way.) Your Home Power Bill will continue to rise until this deficit is made up.. Is this an example of the Poor paying higher prices so the Rich can drive their Tesla.. So... how do you feel about Electric Cars Now? regards

$1,000 gold November 16, 2016

we could see a large trading range in oil from $40-$60/bbl next year. electric cars are still the car we'll all want and drive eventually.

$1,000 gold November 16, 2016

btw, we're not at the mercy of opec, and never will be again. america is in control of oil prices now. opec will continue to pump full tilt just to pay the bills until the day their wells run dry.

Wayne November 16, 2016

I am a member of your real wealth newsletter, but i am definitely a small fish. I would like to get information on the process of buying and selling actual gold. Where should i buy actual gold? How do you know if a location is on the level? What is the elements i should be aware (concerned) about when i buy? Is is correct that the gold must be assayed when it is bought or sold? What are the extra charges when you buy gold compared to the market price published? Thanks for your help.

PB November 16, 2016

The lowest spread & commission physical dealer in the U.S. is at GoldDealer.com. They are in Los Angeles, extremely reputable but don't spend $ on big advert, which keeps their costs low. I have bought from them in person and via mail, both excellent experiences.

j November 16, 2016

could this inversion be forced by the banking changes in india? what with the currency changes the are not concerned with domestic shopping or cant because they cant get money to.??

Cormac November 16, 2016

Larry, You're making the mistake of treating gold as a crisis hedge. It's an inflation hedge and I believe it will go down further as deflation takes hold.

Tony November 16, 2016

Dear Larry, OIL, after falling steadily from $51 and change ; it had a big jump yesterday due to news that OPEC is meeting to halt production in late November. And today Russia supported OPEC!...Is your cycles still predicting oil to fall below $30 by Feb 2017?

Susanne November 16, 2016

So maybe Harry Dent is right after all!

hawk5000 November 16, 2016

IF TRUMP CAN GET THE SPARK LIT on the american economy if theres the slightest hint of it watch out gold will fall sharply so will silver and the dollar will rally and interest rates will rise expect to see the dollar rise against other currencys but if you see silver fall in the range 11-13 dollars per ounce seriously think about purchasing silver eagles they are 99.99% pure silver and they can be bought for several dollars over spot per ounce

Eric November 16, 2016

Rickards said that Stanley Druckenmeir (sp?) dumped his entire gold position overnight once Trump had won it. This caused others to bail out also...

Danny armani November 16, 2016

Hi. I think larry merans lert gold stablizer at this lowerr leverl naturally. Then it takers off .. His meraning is lert it srettle down and thern catch the tuna which serlls for a million dollars in tokyo tsuji fish markert. The frersh tuna is caught n auctioned so will the gold just we have to hold on. We know we have touched the bottom now let it settle beforre the trump asssination takes place then immediately takes gold to good highs.

Dobrin November 16, 2016

My 2 cents. It is the unprecedented dollar $$$ strength we have seen since DT got elected. For some reason nobody is talking about the trade deficit. If the trend of the last 25 years is reversed even slightly it changes a lot of things. Guess who the biggest losers in the currency market have been, our biggest trade partners China Mexico Canada Europe Australia Brazil India.

glen hicken November 16, 2016

silver prices have been controlled by J. P MORGAN BANK since 2007, they now have 550 million ounces storied in a warehouse. if you would like more detailed proof , go to a book, :How JP Morgan Manipulates and Controls the Gold and Silver Market.: by Theodore Butler.

Como651 November 16, 2016

I have a better model than Larry's AI model. It's called Murphey's Law. It predicts if you dump your gold and miners now there will be no cycle inversion and gold will skyrocket upward and you will miss the big rally. If you hold your gold and miners there most certainly will be a cycle inversion and you will see your money disappear. The hedge fund managers probably follow Larry's columns and after his readers react they do the opposite and get your money. Big investors move markets not small investors. Maybe Larry is right long term but if a cycle inversion does happen you will lose a lot of leverage. At least Larry is is being forthright now rather than after an inversion.

John Chisholm November 19, 2016

I think O'Toole's law is a better model of the real world. "MURPHY IS AN OPTIMISTt"

Al November 16, 2016

Larry--do we just wait for our gold miners stocks to get taken out with the stop loss prices you had us put in place when we bought?????

miguel November 16, 2016

I was very anxious waiting your letter talking about gold.I lost all mu money that I had invested in gold I was winning a lot the election day and now lost everything.After read your letter I am investing waiting 1040 -1060.shall I be right? I SHOULD APRECIATTE VERY MUCH IF YOu SHOW US THE Intelligent Analisys modificated. With this new low no expected

Como651 November 16, 2016

What could possibly move gold higher at this point. FED will raise rates if not in December soon after Trump enacts his tax cuts. Tax cuts will be good for stocks, bad for bonds both of which will put more pressure on the FED to raise rates. This is bad for gold in the near term. Until the stock bubble pops I don't see gold doing anything but further decline. There will be some dead cat bounces along the way at each new support level but ultimately I predict gold headed below 1,000 an ounce before 2018. Miners will need to shut down operations and only the most profitable mines will be able to continue operations. This could crush mining stocks. I expect GDX and GDXJ to plummet hard and even when gold finally reaches 5,000 an ounce as Larry predicts mining shares may not fully recover and you'll still not profit.

John C. Gronning November 16, 2016

Judging from history, the world has always been in some kind of conflict. It seems like a good idea to forecast that scenario forward, together with the newest technology, military equipment, the fact that everyone is so different in their choices, threats from other countries, survival situations, etc, to determine what the world needs and somehow chart forward to predict what to invest in.

J November 19, 2016

One thing is certain - we will all die 'ultimately'! You don't have to subscribe anything to know. A prediction something will turn up or turn down Ultimately does not help me with my investment decisions.

Hobbzee November 16, 2016

I'm prone to agree with the underlying issue of deflation, and under those circumstances surely gold isn't going to increase, is it? What concerns me that against a delfationaey backdrop a quick trot down to 1000 dollars could be swiftly followed by a fall to 750.

James November 16, 2016

You made the prediction that when Gold closed above 1275. Weekly, that was bottom. Unfortunatel, that has not held. What do you say about this?

Randy November 16, 2016

I thought the DOW was supposed to have a correction down to around 16,000, first. Is that correction still a reco to go short?

Gene November 16, 2016

Honestly, I am disappointed with Larry's analysis. After the correction to 1250 the tone was that gold is now starting its big rally and a week later the tone is almost assuredly a continued correction for months if not years. Well, does anyone really have an educated idea where gold is going in the upcoming months.

Gene November 16, 2016

Sorry to be blunt. My intension was not that, but does this also mean there will be an inverse reaction to the dollar.

Andrew November 16, 2016

Hi Larry , With your AI , cycle inversion and the 80 years conversion etc ... the bottom line is we still can't beat market manipulation by a few " very very big players " they know what we guys are reading and following . .... But one day these "very very big player " will have to pay back as what you said about the pipe pipers. But for now we are injured as we were too confident base on your last few posting . You send a pretty strong positive signal with little note of caution .... Anyway , just hope that the "very very big player" , the manipulator can be overcome by the force nature !!

Andrew November 16, 2016

Sorry typo error , should be 80 years Convergence

Mark P November 16, 2016

Larry: You adjust when the technical(s) tell you to. I like that. If you didn't then I don't think you would be a Good AnalystTrader. I have been following you since 1998 you are more spot on than wrong. Keep the course.

Gordon Harvey November 17, 2016

Larry, The USD Gold chart is forming a classic head and shoulders pattern. Could break lower as you suggest. Maybe rate increase will be catalyst? Could trade lower into jan, like this year? Will it double bottom before racing to your target. DOW also low in Jan?? Regards,

Gordon Harvey November 17, 2016

Larry, The USD Gold chart is forming a classic head and shoulders pattern. Could break lower as you suggest. Maybe rate increase will be catalyst? Could trade lower into jan, like this year? Will it double bottom before racing to your target. DOW also low in Jan?? Regards,

Tony November 17, 2016

My play book for gold for what is worth between now and the end of year: Gold under $1000 for three reasons. 1) Dollar repatriation on expectation that Trumps more isolationist sentiments will translate into policy supporting increased inward investment whether by tax breaks, repudiation of TPP, new penalties for certain forms of foreign investment and so forth, 2) Hillary's anti Russia rhetoric and US Russia ideology clashing in Syria was fuling the WWW3 fear trade. Trump has completely diffused this and this trade is unwinding big time, stops are being hit en route and volatility traders will make hay while the dust settles. 3) Deflation is still in charge and remains a massive headwind for gold despite the end of the 35 year bull market in bonds post Trump victory. The momentum of deflation and the effects of it will continue to be felt for many many months before the inflationary effects of falling bond prices and Trumps inevitable borrow and build approach begin to turn the global deflationary tide. Opinions are like noses; everyone has one.

Adrian November 17, 2016

I will buy gold mining stocks when I feel the fifth, and final, wave of the dollar rally is over. This is a vicious correction but I certainly feel that we will see another big spike up in the precious metal arena. Since bonds topped out, in July, there is a ticking time bomb under this very extended bull market in equities. Best wishes Adrian.

K. Donohue November 17, 2016

Larry, I've kept mentioning the ten yr treasury rate. Until it starts coming back down, gold is going much lower

John Jenkins November 19, 2016

Wonder who's been short mining stocks?

ss November 20, 2016

keep buying your long-term bonds. :D dollar will go bust with your expansionary fiscal politics...

Ashu juneja November 20, 2016

I believe gold fever is coming from Dec. 5. Italy will divorce europion union,why ? Reason 1 is the trend.brexit, Trump won. Reason 2 spiritual look at the no. Of earth quakes like God signalling judgement. And about cycle conversion this is a keep year 30 days extension.i guess....

James January 6, 2017

Larry your website is so neat and impressive. But do you reckon we could see another gold tranche or even a gold rush? Your fairly up to date on the commmodities markets but what about the stock market is their gonna be a bull run in that? What about the Bonds market? Are they gonna be redeemed before their coupon date is up?