During the summer of 2011, as gold was in the heart of a parabolic rise, the market was quite certain that we would imminently exceed the $2,000 mark. However, we expected it to top just over $1,900 and did not believe we would exceed $2,000, as the market was simply too euphoric at the time. Well, we know how that turned out, as gold topped out just $6 away from our target.

Back at the end of 2016, as the metals were heading lower, the consensus opinion was quite certain that gold would head below the $1,000 mark.  However, we thought otherwise, and as the market had become too crowded in its thinking of a “certain” drop below $1,000, I continually warned that many of those waiting for sub-$1,000 levels may be left behind. And, thus far, we know how that turned out. 

In fact, Doug Eberhadrt, from whom I buy my metals (buygoldandsilversafely.com), continually reminds me of the Thursday evening on December 3, 2015 when I placed an order with him as gold was hitting its $1,045 low, of which I noted in our Trading Room at Elliottwavetrader.net.  And, thus far, that seems to be the lowest level struck by gold over the last 5 years.

You see, when the market assumes something will happen, more often than not, the majority expectation will be proven wrong.  And, my concern is that we MAY stand in a similar position today, so I want to present something you should strongly consider. 

Most market participants are awaiting a “certain” market pullback, with many pointing to the latest Commitment of Trader’s reports as their support for such a pullback. But, I can honestly say that I am not as certain we get any pullback right now, especially if we are not able to break below immediate support. In fact, the markets have set up in place to continue to rally in the upcoming week.  And, if a very strong rally begins to take shape, the covering of the short positions of the commercial traders, as identified in the latest COT report, can propel this market to levels most do not seem to be considering at this time. So, I suggest caution to those trading based upon the COT data – as long as we remain over support.

On Wednesday of this past week, I began to explain this perspective to our members at Elliottwavetrader.net: