We are living through what could go down in history as the greatest financial crises of our lifetime. In 2008 and early 2009, global markets were in turmoil and trillions of dollars were erased from the economy worldwide. Amid chaos and confusion, gold is the “go-to” metal for safety.
There is a saying that “Gold loves the smell of blood, but hates the sight of blood.” As the markets careened downward, more and more people were bailing from the markets and rushing to what they believed were safe havens: bonds, gold, cash. People were eating, living and drinking risk aversion and wanted out of anything related to equities as quickly as possible. Amid this Armageddon scenario that many gold bulls have been predicting since the 70’s, gold managed to rise to over $1000 before falling back.
The question is: is that all there is? Has gold seen its top or is there more to come?
Decreasing risk-aversion was shown by the number of advancing issues vs. declining issues on the NYSE starting on March 23, 2009. My colleague Dave Harder and I described this to the to subscribers of www.thetradingdoctor.comon March 27, 2009 We specifically indicated that when advancers outnumbered decliners by a ratio of 2:1 for 10 straight days ( AD10), this indicated that equity markets had reached some sort of bottom. Historically, his presages a rise in the broad equity markets for a least several months.
Here is a look at Dave’s oscillators for gold as of the week of April 13, 2009: