Gold: Brief Pause Or Final Bottom?

Something may have changed yesterday in the gold market. For one, I think gold probably formed a minor daily cycle bottom yesterday. But what I'm really talking about is its complete recovery from another middle of the night attack. For most of the past year, these late night attacks have worked wonders for sending gold crashing through technical levels and triggering stops. Yesterday however it simply didn't work for the first time.

It's been my opinion for months now that the forces behind these take-downs were trying to push gold back down to the 2007 C-wave top at $1030. At which point I expected they would flip sides and go long for the bubble phase of the bull market. After watching gold fight off the manipulation yesterday I'm starting to wonder if gold has been pushed as far as it's going to go.

At some point, all artificial markets finally say "enough is enough" and the fundamentals regain control and take the market back in the direction it was meant to go. Usually this happens more aggressively than would have happened naturally. We saw this in spades in 2008/09:

If gold is finally ready to break free of the year-long manipulation then we may have printed a final bottom yesterday. The next couple of days should tell the tale. If gold can rally $40-$50 today or Wednesday, and the miners 5% - 10% on heavy volume, that would—in my opinion—be a strong signal that yesterday was more than just a minor daily cycle low. If gold can deliver a powerful follow-through surge off of this reversal then we may just have a final intermediate bottom, and maybe, just maybe, the bubble phase of the bull market is ready to begin.

I told my readers this afternoon, miners have the potential to form a 2b reversal (a technical signal that sometimes spots an exact bottom or top of a trend). One could take a long position at the open today and put a stop right below yesterday's intraday low. If the 2b reversal is valid then the low will hold and the stops will not get triggered. If nothing else it's a low risk setup with a minimal loss but huge upside potential if we did print a bottomyesterday.

If the manipulation is going to continue, it will probably try to regain control tonight. If we see another premarket hit later today then step aside and wait to see if gold can fend off the attack again.