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Recency Bias Is a Gold Investor’s Worst Enemy

Traders and investors have become convinced, since gold hasn't been able to do anything for almost three years, that means it's never going to do anything. This recency bias says, "Because it hasn't been done lately, it means it can't do it."

Gold had been in a bear market since the bubble burst in 1980, and by 2000 / 2001, it had been 20 years since gold had done anything. The recency bias would state that meant gold could never do anything. It was never going to go anywhere. It was a dead asset. "You're never going to make any money in gold."

Except, for the last 22 years, gold has gone up from $250 to $1,900. It had a massive bull market, one of the biggest ever - and has been consolidating for about 11 years now. We haven't had a sustained breakout above these highs of a little over $1,900 for about 12 years. 

The current recency bias is very similar to happened back in the year 2000. Of course everyone "knew" back here in 2001 that gold was never going to go anywhere. So an extreme case of recency bias that proved to ultimately be false, and false on a scale that would cost investors and traders a lot of money. 

Gold has been basically stuck since late 2011. We've had three years of a frustrating sideways churn. However, I am about 99% this is an eight-year cycle low. 

For the people stuck in recency bias who think that because gold hasn't done anything in a long time, that means it's never going to do anything, they're going to be wrong. Just like they've been wrong at all of these major turning points. We are now at a period when these people are most likely setting themselves up to be wrong, and they are going to miss a big probably multi-year move.

In my estimation, it's going to be something along the lines of a huge bull run. The bigger the base, the higher in space. We are at 13 years now in gold, and we are just starting the advancing phase of a new eight-year cycle. We are biding time, waiting a breakout. When this breakout occurs above $2,090, we are going to be on our way. 

If we say gold is currently at about $2,000, a move to $5,000 is only a little over 100%, that's not much for a base this large - this many years of consolidation - $5,000 is a piece of cake. Just like 10,000 was a piece of cake in the NASDAQ. $10,000 gold is not out of the question. 

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