During yesterday’s week, we saw breakdowns and major declines in all parts of the precious metals sector. Even the HUI to gold ratio broke below the key low. Yet, there is something that we saw based on last week’s closing prices that had 100% bullish efficiency in the past few years. What is it and how we can use this knowledge?

Before moving to the details of the above bullish sign, let’s check what changed in gold (charts courtesy of http://stockcharts.com).

First of all, we would like to emphasize that the analogy to what we saw in 2008 before the big slide remains in place as the weekly volume levels continue to be exceptionally high. In other words, what we wrote about the above last week, remains up-to-date:

Yes, the volume has been growing almost constantly, but the 2008 and 2017 buildups in volume still stand out. The growth is much sharper than in other years and no other period is comparable to those years. Since the 2008 volume buildup was followed by a sharp decline in the precious metals sector, it seems that we might see something similar also this and/or the next year.

The thing that we would additionally like to point out on the above chart is that gold moved to (and closed the week below) the 60-week moving average. It had already moved close to this level in early October, but corrected shortly thereafter. Why do we mention this while discussing the long-term gold chart? Because on the above chart you can see something very similar in late 2012 and early 2013. Back then, gold’s final top was followed by a move to the 60-week MA, then we saw a correction, and then a move below the previous low and the 60-week MA. After that low we saw another corrective upswing that was a bit smaller than the previous one.

The implication here is that we could see even lower gold prices on a very short-term basis, then a correction that would not be very significant and then another big wave down. That’s in tune with what we’ve been expecting to see based on other factors, so the above simply serves as a confirmation.