Is this the start of a new bull market for gold?

Gold has a had an impressive run this month. Miners are looking good too. So is this the start of a new bull market, or just another false dawn?

Gold: don't get carried away

I'm afraid ten years of gold investing has given me a bit of a personality disorder.

On the one hand I'm a gold bug loon one of those nutcases you hide from at parties when they collar you and say: "buy gold, buy gold, our monetary system is doomed!", and then harangue you with a load of statistics about US national debt.

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But on the other, I'm a total cynic. Every time gold rallies, I just don't believe it. False golden dawn after false golden dawn has turned me into a total non-believer.

But you'd have to be living a rather secluded existence not to have heard that gold has had quite a run this month.

So is this one the real deal? Or is it yet another false dawn?

Gold has had a cracking month so far but don't get carried away

Let's start with some numbers.

At the start of this month, gold hit an intraday low of $1,240 an ounce. Since then, it has rallied by $82, hitting an intraday high of $1,322 at the end of last week.

Pretty impressive.

The gold miners remember them? have been knock-out. From low to high, the usually turgid seniors (as measured by the Arca Gold Miners index in the US) are up almost 20%, the junior producers (as measured by the Market Vectors Junior Gold Miners index) and the explorers (the Solactive Global Gold Explorers index) are up over 30%.

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If you traded that well, you can take the rest of the year off. It's like the good old days.

I've enjoyed two monster periods in gold and gold shares 2005 to early 2008 and then late 2008 to mid-2011. I've also experienced two horror shows 2008 and 2011 until now.

And if there's one thing I've learned, it's that gold and gold speculators are verging on the bi-polar. It's all or nothing.

The mistakes get made when you get carried away by the hysteria. I was having a drink with a gold broker on Friday and she told me that the phone, having been dead, had suddenly not stopped ringing with buy' orders. Where were all these people at the beginning of the month when gold was $80 cheaper?

When gold goes vertical, it rarely ends well. Avalanche tends to follow rocket launch.

So my initial instinct is one of caution. If you don't have a position in gold, be patient. It's horrible watching gold companies rocket when you're on the sidelines I totally get it but let the excitement settle before you take a position.

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I don't think gold is going to collapse from here, but I think some kind of pullback is pretty likely perhaps to the high $1,200s.

Back in May, when gold was about $1,300 not far off where it is now, but sans hysteria I suggested we would drift lower into June and that,when I wrote another piece on gold in a few months' time, we'd probably be back where we are. I'm sticking with that.

At the beginning of this year, I think I suggested we'd see a high of $1,425 and a low of $1,050.That range now looks far too wide. It looks like the low was $1,180 - made in June 2013 (the lows always come in June, by the way) and re-tested in December.

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At least that's how I'm interpreting things. If events change, I reserve the right to change my mind.

The long-term outlook remains promising

So, the bottom is in. And I think we're in the early stages of another bull market that'll take us a bit higher by the autumn, and a lot higher in a couple of years. I like the way the moving averages are all lining up. Gold supply won't be great in the coming years (not enough new discoveries). And there's plenty of money elsewhere to come back into the sector.

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$1,475 this year? Probably too ambitious, but certainly the high $1,300s or even low $1,400s looks possible. But it will not be one-way traffic - it never is.

This last month has been gold ringing a bell saying: "Hello, I'm here."

What's encouraging is that it has revealed that there is still an interest. When money moves in, things can happen very quickly indeed. On a relative basis, gold and silver are both starting to look very attractive. The gold miners, for all their problems, are about as cheap as they've ever been.

And what I find most encouraging of all is that this move was both anticipated and confirmed by the gold miners. If a bull market is to happen in gold, the miners have to lead. When people buy miners they do so believing higher gold prices are ahead, so you want to see miners leading.

But there is a lot of resistance at $1,320 in gold and at $21 in silver. In all likelihood, it will take a couple of pullbacks to get through pullbacks we'll probably see over the summer. In fact, one may just be starting now. My advice is take advantage of them and accumulate.

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I actually sold some gold shares this week to try and keep my discipline. I'll be buying them back in the weeks ahead.

You can use exchange-traded fundsto play the gold stocks, or of course you can look at your favourite individual ones. (MoneyWeek's Simon Popple writes a newsletter on gold miners,which you can find more about here).

And, of course, if it's physical metal you want, the exchange-traded funds are ETFS Physical Gold (LSE: PHAU) or ETFS Physical Silver (LSE: PHAG). You can also buy physical gold through dealers such as Goldcore, BullionVault and Goldmoney.

If there's interest, I can also profile a few specific companies over the summer let me know in the comments below.

If you do buy in over the summer, for goodness sake manage your risk. Make sure you have a contingency plan in place in case my interpretation is wrong.

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Having said of all this, I'm now going to watch as gold rockets straight to $2,000 and prepare myself for the angry emails I get telling me off for recommending patience.

Dominic Frisby'sBitcoin the Future of Money?is out soon. But you can stillget your name in the back.

Metals and Miners is a regulated product issued by Fleet Street Publications Ltd. Your capital is at risk when you invest in shares, never risk more than you can afford to lose. Forecasts are not a reliable indicator of future results. Please seek independent financial advice if necessary. Fleet Street Publications Ltd. 0207 633 3600.

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