Outlook on Gold, US & Global Equities
Frank Barbera
Our medium term Outlook on Gold is now bearish, and we are bearish on Gold Stocks. Over the next few months, we expect Gold to fall below $550 to the low $500 area, where another long term bottom should develop.
The US and Global Equity markets are also completing major topping patterns, but should manage to hold up on the current rally for another 5 to 7 days. The S&P has a near term target of 1525-1530, and massive resistance at 1540-1550. We believe that within a few short weeks, the Chinese Shanghai Composite Index will begin an extended, multi-week collapse on the order of 40% or more. That decline, when it unfolds should trigger heavy selling in US Cyclical stocks, and in stock markets around the world, with Brazil, Mexico and Germany especially over-extended. The S&P could tumble initally on the order of 10 to 12%, bringing the index back down to the vicinity of the mid-March lows near 1360, possibly somewhat lower. Readers are advised to assume maximum defensive positions and seek the safety of cash.
