Revisiting the bottoming of gold. 3rd time is a charm.

I've been on metals bottoming watch since June 2013.  The bottoming process has been tedious to say the least.  But recent chart action is breathing new life into a case for a breakout.  The big 3 wave move up that is circled below is still obviously a bear market bounce.  After that we would have to expect 5 waves down.  But 5 waves down doesn't have to result in a lower low if that wave is a failed 5th.  And failed 5ths often take the form of an ending diagonal.

We could just have seen the metals bottom with an ending diagonal and a throw under.  The first confirmation is already in: a break back up into the channel.  The 2nd confirmation, if it happens, will be a break out of the upper channel.

If this occurs as I think it just might do, gold will be left with a very powerful inclining double bottom.  If you want to play this with gold  then buy the physical and let the patsies play with the GLD fund.  Yes, GLD allows you to be more nimble but it also ensures you will be paying maximum taxes.  Physical gold?  Well, you just think about it for awhile.

If you are looking for a more leveraged bet, go with GDX, the gold diggers index.  It will far outperform the metal in percentage terms.