Prepare for Monster Five-Year Gold Stock Run


"The moves in the microcap exploration stocks since earlier this year should be opening up your eyes."

I am a firm believer that markets and sectors move almost entirely based on human behavioral and/or "herding" patterns. I wrote an article in late February of this year outlining why I thought the market was about to start a bull cycle, and yet nobody knew it. Perhaps I got lucky, but that turned out to be accurate, and it was certainly not based on fundamentals.

Let's look at the gold sector and why I believe the third leg in the bull market in gold is just beginning. If markets move based on reliable behavioral patterns, then gold and gold stocks are poised for an extremely bullish shift in sentiment.

Most secular bull markets move in Fibonacci periods of time, (3, 5, 8, 13, etc.) measured in years not weeks or days. The tech bull market began around 1986 and moved in a 13-year Fibonacci cycle peaking out in 1999. However, to get there we had to pause after a five-Fibonacci-year run into 1991. There was a three-Fibonacci-year pause, and then another five-year run to the 1999-2000 peaks. That Fibonacci 5-3-5 pattern is obvious to me in the gold sector now.

Those first five years of the tech bull pulled only the early investors in. Secular bulls rarely bring along too many investors in the first stages. Just as the crowd started to get excited about tech stocks again, a Fibonacci-three-year period of choppy trade ensued, with no net gains from 1991-1994, culminating in the Fed cranking up interest rates seven times in that year alone.

The gold sector has displayed the same patterns from 2001-2009. We are in the eighth-Fibonacci-year of this 13-year cycle up, and a shift is about to take place. I identified what I thought would be the early stages of a 13-year gold bull in late 2001.

The final five years of this huge bull market in gold has already started. The fun is about to begin if your long because the final five-year leg will drag everyone in and push stocks to obscene valuation levels. The moves in the microcap exploration stocks since earlier this year should be opening up your eyes.

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