Precious Metals Double Bottom?

As I was adding to my Precious Metals purchases in July 2013, I already understood that only under a rare scenario would Gold and Silver bottom out on a V trough (the weakest of all bottoming formations). While I bought my positions just in case, I understood that we are most likely in for a retest of those lows sometime down the track.

Well, here we are in January 2014, a whole six months later, and only a few days ago both of the metals were retesting their recent major lows, as can be seen in a chart above. The questions on everyones mind is whether or not we are now forming a major double bottom and a final low in the current bear market?

Chart 2: Long term support for Gold is closer to a $1,000 per ounce

Source: StockCharts (edited by Short Side of Long)

Since I do not have a crystal ball, it is remarkably difficult to answer that question. I could answer the above question with a yes or a no, but it would still be a speculative opinion. However, with that in mind, my personal opinion is that Gold will most likely break lower (eventually) towards the major support area around $1,000 per ounce. That would push Gold into a 45% bear market and one of the worst corrections in history – setting up for a great buying opportunity.

Regardless of whether this happens or not, I continue to believe that both Gold and Silver are a great buy at current prices regardless, as I see both metals making new all time highs in coming years (Gold above $1,920 per ounce and Silver above $50 per ounce). Furthermore, sentiment is so negative as I write this, that a relief rally of approximately 10% in Gold and 20% in Silver should not be ruled out (refer to the Chart 3).

Chart 3: Public Opinion on Silver is extremely negative right now!

Source: SentimenTrader (edited by Short Side of Long)