and it was concluded that gold crossing the would mark entering a new phase.
Here again are the three phases of Dow :
1) Accumulation phase: In this first phase, the most informed, astute, and
contrarian investors buy. If the previous trend was downwards, then clever
investors can see at this point that the market has already discounted the “bad
news”. For gold , this phase lasted from 2013 to June 2019.
2) Participation phase: Prices are starting to rise slowly. Trend followers are
showing interest; news is improving; and commentators, the media, etc. are
increasingly optimistic. Speculative interest and are rising, new products
are being launched, and analysts’ price targets are being raised. This phase began
after gold crossed the resistance in June 2019 and could now last for several years.
3) Distribution phase: During this final, mania phase, the group of informed
investors who have accumulated from near the low point begins to reduce their
positions. Media and analysts outperform each other in raising their price targets,
and the environment is characterized by “this time is different” sentiment.
In my opinion the gold price is currently in the first third of the participation
phase. Investor demand will be the dominant factor driving the price, because gold
is apparently a Giffen good, especially in Western markets. As we expected last
year, the break above the at USD 1,360–1,380 has triggered
increased interest from institutional investors.
From the point of view of current market sentiment, , and the
report, I would not be surprised to see a several-week “chill-out” phase at the
moment. However, I do not expect a deep correction, as great buying interest
appears to be waiting on the sidelines to “buy the dips”. The recent rise in the
of silver and mining stocks also gives confidence. Thus,
the conditions for the continuation of the new gold bull market seem excellent from a
technical point of view.
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