Gold has, as we all know, been a complete dog since the middle of 2011, having lost about 40% of its value. As 2016 began, it looked like gold was ready to reward the bulls again -- just as equity bears were all-too-briefly rewarded. But in both cases, things fell to pieces. Gold’s front month below shows the metal’s continued weakness since July of this year.
I put the arrow at that gap because I think another important stair-step lower has been put in place. That gap, I fear, will not be filled.
Looking at the longer view, I suspect gold will remain weak until it tags the red trend line at approximately the place I’ve put the arrow. At that point, gold has a chance to rally, but no higher than the aforementioned gap. If and when all of that happens, I suspect gold will simply re-weaken and perhaps even crack back down into the triple digits again (although I doubt it will get that bad).
Suffice it to say, the prospects for precious metals -- and more so, the miners -- look grim for 2017.