NEW YORK (TheGoldAndOilGuy.com) -- During the past year there has been very little talk about gold, silver or gold stocks in the media. Yet the year before, this was all the media could talk about. Business TV programs would even stream the price of gold in a corner of the screen all day long.
I am always amazed how the masses and media can be so off in their timing of the stock market and commodities. For example when Greece was having issues in 2012, everyone was avoiding investments in that country like it was the plague. Since then, Greek stocks have recovered, but only recently have investors been confident enough to put money into it.
But the truth is that big move has already happened, and the U.S. and global markets are in rotation (changing trends). Money is slowly shifting from what had been hot during the past year or two, to new investments that have a lot more room to rise in value. And this is leads us back to my gold forecast.
If you are at all familiar with Stan Weinstein's work, then you understand the four market stages. If not, you can learn these four stages on my Stan Weinstein page. Using stage analysis we can predict the type of price action we should expect and have a rough idea just how long a move (new trend) is likely to last. It is important to know that Stan Weinstein's stage analysis works on any time frame, from a one-minute chart to a monthly chart. If you do not know this, then you are trading nearly blind.
Current stage analysis looks as though the U.S. stock market may be starting to form a stage-three top. There are several indicators and market behaviors that are screaming, telling us to trade with caution to the long side. But the masses do not see this or hear what is unfolding in front of their very own eyes, and that is fine. It actually reminds me of a funny old movie called See No Evil, Hear No Evil.
In short, the market is showing some signs of distribution-selling in stocks, and the stocks that were leaders are now getting crushed on heavy volume. I'm talking about groups such as biotech and social media. This is bad for the stock market.
This raises a question: Where will investment capital go during the next bear market in stocks?
One of the places is precious metals, and my gold forecast shows one main reason why.
Gold Forecast CliffsNotes:
1. The U.S. dollar index has set up a massive stage-three topping pattern on the weekly chart. A falling dollar will send the price of gold higher naturally.
2. Bullish gold forecasts by the media have dropped substantially, meaning everyone is bearish on the precious metal.
3. Gold stocks are already showing signs of massive accumulation. I always use the price and volume action of gold stocks to help create and time my gold forecasts.
Gold Forecast Conclusion:
Gold market traders should understand that precious metals in general are still months away from breaking out to the upside and starting a new bull market. Do not be in a rush to buy gold or gold stocks yet. There will be plenty of time, folks.
Get My Weekly Updated Gold Forecast & Gold Trading Alerts at: www.TheGoldAndOilGuy.com
At the time of publication, Vermeulen had no holdings in gold or securities mentioned.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.