have been pretty silent about gold as it has gone up and down and up and down again and again … and, most recently, it’s started back down. folks, this is a complicated correction in Gold. And, mind you, its just that – a CORRECTION in a multi year down trend. here’s the thesis – we are the last wave of a contracting triangle which will then cause a very very strong move to the upside .. but, for now, I believe that will end a C wave and the a-b (triangle) – c correction will be over and another leg down in Gold will begin. now, mind you – this is going to all take months or a year or so to complete but it’s the best interpretation that I can think of, for now … so, near term, if your bullish (which I am near term and am already long) get ready to BUY gold once this ‘e’ leg of the a-b-c-d-e triangle is complete.
OK, don’t shoot me … but I’m going to continue w/ the 3 waves down into a new low is in face a “B” wave and therefore the current move is wave 2 of C. AS LONG AS THE LOW of 1073 holds then this scenario is in play …
also note, in an expanded flat, 1.618*a = c is right on the 1.27 extension and ABOVE 1073.
CLIFF NOTES: a case is made, below, that inflection points in the ratio of GOLD/SILVER cause big movements in the spot gold and silver prices. Also, it appears that Gold lags. We are at a resistance level which “might” be one of those inflection points so expect the metals to get moving NOW or SOON. Probability points “lower” across the board for the metals.
Ratio Analysis – we love using the patterns w/ ratio analysis and, of note, is the noticeable strength in Gold vs Silver the past couple weeks. So, our first chart is going to be the relative strength of spot gold / spot silver. Basically, when the candles are going DOWN then SILVER is “stronger” and when the candles are going up GOLD is “stronger.” After looking at this chart one thing stood out … it really didn’t matter which direction the relative strength ratio was moving, but when the ratio shifted and one of the assets noticeable started to our perform or under perform THEN we had an inflection point in silver. Below you will see a set of three charts showing you the PATTERNS that were present in these ratio’s which, if we knew about them, might have helped us position ourselves – based on other patterns and technical factors — on the long or short side of the spot silver or spot gold market or both.
so where are we now …? Just using basic measured moves we can see that EVERY move in this ratio has been “used” before so our trick is to find out which one might work or not. Note the downward blue and orange arrows … then note the crash and how the vectors were almost perfect. so … we “should” do either the black or the purple measured move UP –right? note we are at the .618 of the gold/silver ratio and the black arrow would take us up to the .786. One of those two levels “should” hold and cause an inflection in the ratio. See below:
so – now that we can see resistance ahead, has the ratio really helped pinpoint inflection points?
what about Gold? Well, take a peak … the key thing I see is that while it’s not as “precise” from a timing perspective it appears that GOLD LAGS THE INFLECTION IN THE RATIO …
here’s the daily:
Now, let’s take a look at the metals individually. Folks, below is a great chart .. it shows the pegged price of gold from 1913 and, guess what, roughly 1200 is the .382 retracement. So, in the context of this long run in gold prices (100 years in the making) Gold is holding the .382 retracement which is EXTREMELY BULLISH. So, if you don’t believe me here’s the chart:
if we do break that level – look for 950-1000. Spot silver – sticking w/ my guns here and a buy at 14.
Copper – folks, still sticking w/ a MAJOR 5 wave move in copper complete. More to the downside and, remember, how FXI (China) likes/mirrors copper ….
I really DO NOT KNOW or have a BIG OPINION on the top at 1920 on spot Gold. Well, it was either a BIG 3 or BIG 5 but I just don’t know … doesn’t change the fact that a long on Gold could be coming in soon. It’s just how high it will go … if the top was 3 then we’ll see new all time highs. If the top was a 5 then this current bounce shouldn’t see higher than 1525. Then into new lows but a BUY is approaching …
We do know that the correction that started in the 1980’s from 850 to 250 was roughly 600 bucks and we went 160 points lower than that so this current move lower is the largest corrective move in the history of gold prices. so we got that going for us, which is nice….
right now, the spot gold complex reads: WAIT but we do have a strategy to watch and monitor over the coming months ….
then you’ll see how I’m looking for one more move lower on the Gold to set up a very nice buying opportunity. you’ll also see the reason why the levels approaching on the Gold/Silver Index are so key. Stay tuned on the Gold/Silver index because the level it found support in is KEY .. if we break that to the downside via a daily close below that level, then the index and Gold could certainly take a smash. stay tuned …
After the Silver post the inquiries regarding Gold have flooded in … so, in part 1 we’ll take a look at the Gold/Silver Index. The $XAU is the Philidelphia Gold/Silver Index and consists of 16 precious metal miningcompanies. This index and the $BUGS are the two most watched precious metal indices in the world. The index and the spot prices of Gold and Silver have moved in sync, nicely at the low in 2008 and mostly on the way up and down. The interesting aspect to look at is the lagin the spot gold price once the index had reached it’s target …this is what I’m looking at for a reference point. As you can see, the recent low in/around 82 was a very strong harmonic target and fits nicely into a potential big low for the index. However, when we show spot Gold in part 2 we have the potential (which would fit nicely into our preferred sequence of events) for the Spot Gold to turn in/around here for one more low. I would like to see the $XAU consolidate/pause/bounce around the recent lows while gold finishes one final leg before beginning a POTENTIALLY explosive BULL MOVE. Stay tuned and enjoy the charts … again, know nothing about the fundamentals of the Gold metal or the 16 companies just following the bouncing ball of patterns that can make very nice entries to manage risk possible.
Will update the Spot Gold chart later this afternoon or tomorrow … back to mowing the grass.