You don’t have to be a financial genius to spot the bullish trend in the gold market. It jumps off the page when you look at any weekly or monthly price chart. For six years the gold price has risen in the classic bull market pattern — a series of higher highs and higher lows moving diagonally in waves toward the upper right hand corner of the page.

But a chart only tells you about the past. The big question is whether gold is going to continue to rise in the future. I believe that it will and I base my opinion, in part, on my view that the recent bull market in gold, since its beginning, has been a “realizing market.” To explain what I mean, I need to delve into bull market anatomy.

The credit for my terminology goes to Bill Gary, the President of Commodity Information Systems, a publisher of commodity price charts. He divides bull markets into two major categories: “anticipatory” bull markets and “realizing” bull markets. The difference between the two is striking.

An “anticipatory” bull market is fueled by some specific ongoing event that, in the mind of the bulls, will soon lead to a significant and identifiable tightening of supply. And less supply, of course, all things being equal, means higher prices. Anticipatory bull market are very obvious, very exciting and can be extremely short lived.

The classic example is a “freeze” bull market in orange juice futures. It seems to happen almost every Winter. A huge arctic high pressure system starts to sweep South from the Canadian plains. The instant that is recognized the O.J. futures start to twitch. As the cold front moves toward Florida the futures price of O.J. begins to rise.

What is happening is that speculators are betting that the cold front will reach Florida and decimate the orange juice crop. That’s not very nice of them, I suppose, but business is business. The sellers (the people on the other side of the trade) are betting that the crop will survive.

The sellers usually win. The cold front either peters out or simply isn’t strong enough to affect the crop in the face of defensive measures from the growers such as smudge pots and spraying the fruit with water. (Don’t ask me why that works, but it does).

The whole drama is enacted from start to finish over a matter of days, but you can see how the bull market is “anticipatory.” The orange crop is just fine when the bull market begins, but traders are anticipating a supply disruption. Also, there tends to be a lot of news coverage and market excitement in an anticipatory market. For O.J. traders, The Weather Channel, at least for a while, becomes more interesting than CNBC. (In fact, in my opinion it is almost always more interesting, and certainly more informative, than CNBC).

All “weather markets” are anticipatory and they are more typically played out over a matter of months. “Drought markets” in grains are good examples of anticipatory bull markets, with futures brokers trying to rev up market excitement with talk of “beans in the teens.” But the result is usually the same as with the O.J. — the crop survives and the sellers win.

“Realizing bull markets” are a whole different breed. Rather than being fueled by information, they seem to just happen. And, because there is a lack of hard information, there is skepticism and doubt the whole way up.

The current bull market in crude oil happens to be a pretty good example. There are lots of theories as to why the market has been rising, but there are plenty of doubters ready and willing to dismiss each theory. Is it because of “peak oil” (the theory that the world’s oil supply is running out)? Is it tension in the Middle East? Is OPEC keeping oil off the market? Who knows? But there have been skeptics every inch of the way up from fifty dollars a barrel to almost a hundred.

This is called a “realizing” bull market because the market realizes that there is tightness of supply only after the fact. Since the market move never seems to be explained it is repeatedly questioned. Every downturn is proclaimed to be the end of the bull market. Of course the market immediately starts heading right back up and makes new highs.

One of the characteristics of a realizing bull market is that it has “legs.” It goes much farther than anyone (other than the hardest core of the bulls) ever considered imaginable. Who ever thought that crude oil in 2007 would pass ninety dollars a barrel? The market climbs the proverbial “wall of worry” that characterizes bull markets. (Bear markets “flow down a river of hope”).

In my opinion the bull market in gold is a classic realizing market. There are lots of theories to explain it, but every one has its doubters. Maybe it is slowing production from mines. Maybe it’s the falling dollar. Maybe it’s less Central Bank selling. Maybe it’s stealthy Central Bank buying. Maybe it is the price of oil. Take your pick. I certainly don’t know.

One thing for sure is that there is not rampant bullishness among the public. Not even close. A twenty-eight year high in the gold price barely made the news. The Main Street investor simply doesn’t have gold on her or his radar screen. Every correction is proclaimed to be the end of the bull market. In contrast, in an anticipatory bull market every correction is called a “buying opportunity.”

My analysis of bull markets is hardly the only one available. It is common to describe bull markets as moving in “stages” with the early ones being quiet and the later ones frenetically speculative. I simply view that as a realizing market becoming an anticipatory market with the public moving in and the pundits declaiming about some imminent market scenario will drive prices to the moon.

That explains my belief that the time to get out is when the public starts getting in. That is why, in my “Gold Market Advice for Today” on this site, I have specific touchstones for the time to leave. Having gold show up on the cover of Time Magazine is my favorite. At that point everyone will be talking about the impending collapse of the international monetary system, everyone will be recommending gold, and the end of the bull market will then be in sight since the end of the world, in general, tends not to happen.

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