"I think the big move in gold is a lot further out than people are anticipating," said Chris Vermeulen of TheTechnicalTraders.com.
Chris Vermeulen: Gold's Big Move Delayed, Crash in Stocks Coming — How to Positionyoutu.be
Gold's promising setup earlier this year has faded away, pushing a breakout further into the future.
Chris Vermeulen, chief market strategist at TheTechnicalTraders.com, said he's keen to see the yellow metal trade higher, but reminded investors that big price moves often take time.
"If the US stock market and the economy continue to weaken — (and) I think we're going to be in a bear market for stocks for potentially another eight to 16 months easily — that's going to keep pressure down on metals," he said.
"At best, metals are going to hold up — maybe they're going to pull back a little bit more and consolidate," Vermeulen continued. "I think the big move in gold is a lot further out than people are anticipating."
He looks at the market in stages, where stage one (basing) and stage three (topping) are not good times to trade; conversely, stage two (advancing) and stage four (decline) can be profitable.
In the short term, Vermeulen believes stocks could undergo a multi-month "complacency rally" followed by a bear market leg to the downside. "Eventually it's going to roll over, and then all hell's going to break loose — people are going to freak and we're going to go into a real stage four bear market," he explained.
A situation like that would put pressure on most asset classes and investors, but Vermeulen said if a complacency rally comes first that will provide opportunities to better position for the coming bear stage.
In his opinion, short-term trades are key in these volatile conditions. "Your trades are only going to last a few days," he told the Investing News Network. "You get in, if you're lucky for a couple of weeks, (then) you get out — don't be buying and hoping things are going to go up."
Watch the interview above for more from Vermeulen on gold and the markets.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
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