Investment manias and extraordinarily optimistic forecasts always go together.
You probably remember the book titles "Dow 36,000," "Dow 40,000," and even "Dow 100,000." They all published during the late 1990s stock market craze.
Earlier this year, radio commercials said gold prices would climb to $5,000.
So it's not surprising that gold enthusiasts have recently said the precious metal is just "resting" before the next big run.
Before the pullback from gold's September 6 high of $1921.50, the maniacal optimism which accompanied the price climb was hard to miss. See the chart below:
In the weeks after the high, gold prices fell some 20 percent; since then prices have modestly rebounded.
Will gold prices resume their decline, or is the precious metal merely "consolidating"?
Well, when gold traded below $300 a decade ago, few investors were interested. Now that prices have quintupled, there are countless gold bulls -- even with the precious metal off its high.
In a 2001 interview, Robert Prechter said:
"I've studied all the manias going back 400 years, and in every case, the prices that existed before the mania started are exceeded on the downside."
The Elliott wave pattern of gold prices is signaling a timely message.
Moreover, the December Financial Forecast says:
"A significant divergence across various time frames is occurring between the trends in gold and silver..."
The latest Financial Forecast goes on to explain the meaning behind that observation, complete with a revealing chart. Plus, the latest Elliott Wave Theorist devotes an entire section to silver, and our Short Term Update gives you in-depth gold and silver analysis three times a week.