Every year between May and July gold completes a summer ICL. Here is what has happened so far in this decade following that ICL.

2011 gold rallied 10 weeks for a 30% gain
2012 gold rallied 21 weeks for an 18% gain

Bear market begins:
2013 gold rallied 9 weeks for a 21% gain
2014 gold rallied 6 weeks for an 8.5% gain
2015 gold rallied 12 weeks for an 11.2% gain

Bear market ends:
2016 gold rallied 6 weeks for a 14.7% gain
2017 gold rallied 9 weeks for a 13.2% gain

The minimum gain out of a summer rally was 8%.
The average rally is 12%.
The minimum duration is 6 weeks.
The average duration is 10 weeks. If we toss out the long rally in 2012 the average is 8.5 weeks.

As I believe gold is in a new bull market I think we should assume at least a 10% gain from the bottom of the ICL to top of the summer rally and at least a two month duration.

A 10% gain would take gold back to $1365 over the next 2 months assuming we completed the ICL on Friday. That should at least be good enough for GDX to test the top of it’s trading range at 25-26.

If on the other hand this is the intermediate cycle where gold finally breaks free of its basing pattern and it pushes up to, or through $1400, the Bollinger band contraction has surely produced enough energy for an explosive move in mining stocks that at least tests the baby bull high (roughly $31-$32 in GDX).

Remember to profit in the market one has to be able to adapt to changing market environments. The last two years have conditioned traders to expect disappointment from the metals. If that is about to change the vast majority are unprepared for it, and I expect few will be able to adapt quickly to a different gold market and make money from what I think is potentially going to be profitable in a similar degree to the baby bull. Most traders missed that rally as well after having been conditioned by the bear market to expect only lower prices.

 

Don’t forget the 2018/2019 challenge starts on Monday.