Avi's [GDX] model update

In this link I provided my interpretation of Avi's model back in early 2015.  The model from that post is below.  The essence of this model is that we are in a retracement of a larger bull market whose wave 1 up peaked in 2008 and since then we have been in an expanded flat correction.  Once wave black 2 is done, wave 3 up will begin as the fiat currency system of the world begins to prove to even the weakest minded that paper money has an intrinsic value of zero.  In this environment, gold goes up relative to all monopoly money.


Since then, the chart has certainly continued in the same direction as the model indicated even if spanning more calendar time than shown above.  Additionally, the suspected 4th wave circled in red above went up too high to have been a 4th so the count was adjusted below to take that into account.  In short, that little bullish short term move opened the door to more bearishness longer term.

Bottom line: a near term rally is expected but we cannot be sure at this point that the golden bear is over.  Still, at the worst case we just finished 3 of 5 of 5.  This is the time that normal people should be accumulating because other more bullish counts are possible.  The one thing that we do know is that we are faaaaar closer to a bottom than to any kind of irrationally exuberant peak.  Buy low.

I will be monitoring the shape of the expected bounce to see if it gives clues on this bigger picture.  But the fact that some are out calling gold a pet rock tells me that pessimism toward the metal is reaching historical negative extremes.