We recently interviewed Avi Gilburt of ElliotWaveTrader.net, a widely followed metals and market analyst who is currently ranked as the highest "Opinion Leader" on gold and precious metals at Seeking Alpha.
Here is a summary of his interview (click here for audio) with Q&A below:
- If gold retests the $1180 region again, it could break much lower
- Expect more volatility in GDX & GDXJ as struggle continues for a bottom in miners
- Market likely to face one more severe correction before finally topping circa 2016
Financial Sense: Avi, gold is currently trading around $1300 and many believe it may have bottomed around $1180 at the start of this year. Do you think we could test that $1180 region again?
Avi: I think if we're going to be testing that region I think the region is going to break. And it could break quite significantly to the point where—if we're able to hold the $1000-1050 region and we have an appropriate pattern development into that region, then I think we probably can consider that a bottom. But, I have to be honest with you, I'm looking at the potential for a snapping of the $1000 region and taking a lot of people out of this market right before it turns into the remaining bull-run that we expect over the next number of years.
Financial Sense: So, a possible break below $1000?
Avi: Yeah. I see the potential...I'm not expecting it just yet. I still need more information to determine if it’s even possible just yet, but there's an out-sized possibility we could get as low as $700. It's interesting because I published an article in mid-2011 which actually called the top in gold within $2 or $3. We nailed the top in gold and at that same time even before gold topped I put out targets for the bottom of this correction and the main target region that I was looking for...I said that if we broke $1400 then I'm looking for somewhere between $1000 to about $1075—I think was my target at that point. We've hit that target already. The problem is, if you take out $1000, there are two levels below $1000 that can still be targeted. One is the $900 region. The other is the $700 region. So there's still a little bit more information I'm going to need to see over the next month or two, but there is potential to head that low.
Financial Sense: Gold stocks are currently outperforming bullion with GDXJ, for example, up 37% year-to-date, GDX up 24%, whereas gold itself is up only 8%. What are the gold stocks telling us?
Avi: What we've done is that we've looked at the GDX at greater detail, specifically some of my analysts have been taking apart the GDX and all the stocks or the greater portion of the stocks that make up that fund, as well as a number of the stocks in the GDXJ, and we found a lot of very interesting things. A number of the stocks within the fund you can consider have a very long-term bottom in place. Meaning, you can see them running from the region they've bottomed ten-fold—that's not even an exaggeration. Some of these stocks have monstrous upside....but the problem is, even within the larger of those, they're split as to whether or not we have a solid bottom in place on them. So that's why we're seeing the struggle going back and forth and the significant volatility that we expect to continue on both of those funds.
Financial Sense: Avi, with regards to stocks, do you think we'll see a final euphoric phase of this bull market as we've seen in the past?
Avi: That's my expectation I believe for 2016. Somewhere around the 2016 period of time I believe that is what we could be seeing. Until then, while I do see a very strong potential decline over the next six months, once we break that 1900 region [on the S&P 500]—I do see that big decline taking place—I still do not believe yet that this market is done with these all-time highs. Initially, years ago I didn't think we could get up to the 2000 region, but as we were developing this move higher I now see the possibility of getting up even as high as 2500 to 3000 on the S&P, but not yet—not just yet. That's going to take some time. That's the 2016 region...[but] my expectation is that, once we get that big decline, then you're going to start seeing mom and pop pouring into this market which is what's going to be driving our last move higher.
To hear this full interview with Avi Gilburt and to gain full access to all our premium interviews and content, please CLICK HERE to subscribe.
Audio Link | Other Expert Interviews | iTunes Podcast | Comments or Inquiries
