Telegraphing the Turnaround in Gold

As of last Friday, gold has now fallen as much 35.4% (based on London PM fix prices) over 96 weeks. But if you’re like us, you still recognize that the core reasons for investing in gold haven’t changed. People who sold their gold recently made a shortsighted decision. Before too long precious metals will rebound—and probably in a big way.
But when? Does history have any clues about how long we’ll have to wait for that rebound?
Perhaps the most constructive way to forecast a turnaround in gold is to look at how its price behaved in prior big corrections.
Here’s an updated view of gold’s three largest corrections since 2001, along with the time it took the price to return to the old high and stay above that level.

 It has taken a significant amount time for gold to return to old highs after each big selloff this cycle. And the bigger the correction, the longer it has taken—with each correction lasting longer than the last.
However, I think our current correction more closely resembles what occurred in 1974-1976 than any of the dips so far this cycle. Here’s an updated overlay of the gold price then and now.
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