Gold has not even been able to muster a rally on the Greek crisis, which is a bad sign, especially as the dollar looks like it is preparing to break out upside from a large consolidation pattern. On its 8-year chart, we can see that gold is still in the large downsloping consolidation pattern that has been going on for 2 years now. Goldbugs like to think that this trading range is a base pattern, and while it may be, this is viewed as wishful thinking. Instead, it looks like the B-wave of a large A-B-C correction from gold’s highs in 2011. If it is, then the C-wave, which is suspected to be imminent, will take gold down at least to the strong support in the $1000 area, and probably lower towards the lower boundary of its large downtrend channel shown – if it gets there, we are looking at $850 - $870. The good news is that this should mark the end of gold’s bear market, especially as a rising rate cycle is just over the horizon, and contrary to popular belief, gold thrives in a rising rate environment – anyone remember the late 70’s??

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