It’s very important for investors to act prudently and professionally with their investment capital in the gold market. As a particularly interesting example, most North American gold stocks had a big sell-off yesterday, while my entire “Thunder Down Under” portfolio of Australian gold stocks was up overnight!   

My current mindset is to be a very modest buyer of North American miners trading at generational lows, and a very modest seller of the Aussies that are moving to fresh all-time highs. I cover the key Aussie stocks action at www.gracelandjuniors.com to keep investors smiling.

Most of what is happening in the gold market from both a fundamental and technical perspective is pretty mundane.

There’s shoulder symmetry being “sculpted” onto this fabulous weekly price chart. That left and right shoulder symmetry occurring in the late stages of a giant inverse head and shoulders bull continuation pattern.  It takes many years for these patterns to form and be completed.

That’s because charts are created by fundamentals. The system risk fear trade of the West is giving way to the more sustainable price drivers of long term inflation and the Chindian love trade. The transition takes many years and investors should savor the process, like savoring a fine wine.

When gold was trading near $1370 I cautioned excited investors that a pullback to $1180 was required to give this pattern “Michelangelic” symmetry.

That’s happening now. As expected, the volume is declining as the price meanders down towards my “ultimate symmetry” $1180 target zone. 

Look at this interesting gold and COT report chart, courtesy of barchart.com:

The smart money commercial traders (producers and swap dealers) are eager buyers as gold meanders towards $1180, and that’s good news.

May gold investors in the East are also buyers. Chinese dealers report very solid demand. As of Sunday, Indian dealers were waiting for further weakness before doing additional buying. I expect to see them buy aggressively if gold does make it to $1180 before turning higher.