February 16, 2013 – As the bullish stock market pushed once again to new highs, experts are becoming increasingly anxious about the lack of correction in the market.

As Business Insider and many other news outlets reported this week, Swiss hedge fund manager Felix Zulauf has expressed extreme concern that the market is growing on hype rather than based on true technical value. In an interview with King World News, he warned that if we don’t see a sell-off soon, then the stock market is facing a dangerous repeat of the Black Monday crash of 1987.

Zulauf, who founded Zulauf Asset Management and has served as a panelist on Barron’s Roundtable for more than 20 years, projected that gold bullion will rise to new all-time highs during the coming market chaos.

“It’s a top building process that we are in,” Zulauf explained to King World News‘ Eric King. If the markets do not correct as I expect some time in spring, if the markets would continue to go up, and not be confirmed by internal technicals, then it gets very, very dangerous.

“Then we would resemble much more a market situation that has some similarities to 1987,” Zulauf continued. “I’m just saying we are in dangerous territory, and people should be aware of that and take precautionary steps.”

According to Zulauf, corrections are necessary to improve the technical situation of a market, to ensure that they reflect the true value. In the process, investors go from high optimism to deep pessimism.

“That’s what has happened in the gold market,” he explained. “[Various countries] constantly debase the currency which is bullish for the gold price. Therefore, the fundamentals remain fully intact for gold.”

He pointed to 2011, calling it a “buying climax” for gold bullion when it moved rapidly from $1,500 to $1,900 an ounce.

“That marked the end of one stage,” he explained. “I said, around that time, that we would go through a lengthy correction and congestion period, which we have done. We went from high optimism in the gold market to pessimism. Actually, the sentiment numbers you see in the gold market today are about as depressed as when gold declined in 2008 from over $1,000 to $700.”

Zulauf stated that today’s improved technical situation in the gold market was lacking before and that we are near the end of a current cyclical correction of the gold market.

“Probably this will end sometime in the next two months or so, and then we will rally again and go to new [all-time] highs.”