The above weekly chart (click above chart for 1600 pixels of full detail) looks at cases where gold came down from an RSI overbought condition at a bull run high to or thru the RSI 50. It counts the number of months from the high until a new high appears.
There's a green rectangle for each such situation:
- Upper left corner is the high that gold came down from.
- Upper right corner shows the time when the new high was achieved.
- Lower edge gives the low of the correction that follows.
In the beginning of the bull run the highs were not very far above the 30 week moving average and it was 7, 8, 10 and 10 months until the new high appeared.
April 06 and Feb 08 were big affairs with plunges bigger than that of the fall from the Sep 2011 high. They also took a little longer to achieve new highs (16 months and 18 months). That would be Jan 2013 or Mar 2013 if the current correction turns out like those two corrections. So, we are just about due for a move higher in the price of gold if those corrections resemble the current one.
Going a year out from 14 months after those two highs yields price rise from $625 to $910 (46%) and from $990 to $1210 (%) giving target prices for November 2013 of $2490 and $2093 respectively.
Think the gold bull market is still intact and will stay that way another year? I myself don't see anything that has changed. Most importantly, we still have negative interest rates in terms of AAA rated bonds all around the world.