Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Stock Market Investing LESSON - Buying Value - 27th Nov 21
Corsair MP600 NVME M.2 SSD 66% Performance Loss After 6 Months of Use - Benchmark Tests - 27th Nov 21
Stock Maket Trading Lesson - How to REALLY Trade Markets - 26th Nov 21
SILVER Price Trend Analysis - 26th Nov 21
Federal Reserve Asks Americans to Eat Soy “Meat” for Thanksgiving - 26th Nov 21
Is the S&P 500 Topping or Just Consolidating? - 26th Nov 21
Is a Bigger Drop in Gold Price Just Around the Corner? - 26th Nov 21
Financial Stocks ETF Sector XLF Pullback Sets Up A New $43.60 Upside Target - 26th Nov 21
A Couple of Things to Think About Before Buying Shares - 25th Nov 21
UK Best Fixed Rate Tariff Deal is to NOT FIX Gas and Electric Energy Tariffs During Winter 2021-22 - 25th Nov 21
Stock Market Begins it's Year End Seasonal Santa Rally - 24th Nov 21
How Silver Can Conquer $50+ in 2022 - 24th Nov 21
Stock Market Betting on Hawkish Fed - 24th Nov 21
Stock Market Elliott Wave Trend Forecast - 24th Nov 21
Your once-a-year All-Access Financial Markets Analysis Pass - 24th Nov 21
Did Zillow’s $300 million flop prove me wrong? - 24th Nov 21
Now Malaysian Drivers Renew Their Kurnia Car Insurance Online With Fincrew.my - 24th Nov 21
Gold / Silver Ratio - 23rd Nov 21
Stock Market Sentiment Speaks: Can We Get To 5500SPX In 2022? But 4440SPX Comes First - 23rd Nov 21
A Month-to-month breakdown of how Much Money Individuals are Spending on Stocks - 23rd Nov 21
S&P 500: Rallying Tech Stocks vs. Plummeting Oil Stocks - 23rd Nov 21
Like the Latest Bond Flick, the US Dollar Has No Time to Die - 23rd Nov 21
Why BITCOIN NEW ALL TIME HIGH Changes EVERYTHING! - 22nd Nov 21
Cannabis ETF MJ Basing & Volatility Patterns - 22nd Nov 21
The Most Important Lesson Learned from this COVID Pandemic - 22nd Nov 21
Dow Stock Market Trend Analysis - 22nd Nov 21
UK Covid-19 Booster Jabs Moderna, Pfizer Are They Worth the Risk of Side effects, Illness? - 22nd Nov 21
US Dollar vs Yields vs Stock Market Trends - 20th Nov 21
Inflation Risk: Milton Friedman Would Buy Gold Right Now - 20th Nov 21
How to Determine if It’s Time for You to Outsource Your Packaging Requirements to a Contract Packer - 20th Nov 21
2 easy ways to play Facebook’s Metaverse Spending Spree - 20th Nov 21
Stock Market Margin Debt WARNING! - 19th Nov 21
Gold Mid-Tier Stocks Q3’21 Fundamentals - 19th Nov 21
Protect Your Wealth From PERMANENT Transitory Inflation - 19th Nov 21
Investors Expect High Inflation. Golden Inquisition Ahead? - 19th Nov 21
Will the Senate Confirm a Marxist to Oversee the U.S. Currency System? - 19th Nov 21
When Even Stock Market Bears Act Bullishly (What It May Mean) - 19th Nov 21
Chinese People do NOT Eat Dogs Newspeak - 18th Nov 21
CHINOBLE! Evergrande Reality Exposes China Fiction! - 18th Nov 21
Kondratieff Full-Season Stock Market Sector Rotation - 18th Nov 21
What Stock Market Trends Will Drive Through To 2022? - 18th Nov 21
How to Jump Start Your Motherboard Without a Power Button With Just a Screwdriver - 18th Nov 21
Bitcoin & Ethereum 2021 Trend - 18th Nov 21
FREE TRADE How to Get 2 FREE SHARES Fractional Investing Platform and ISA Specs - 18th Nov 21
Inflation Ain’t Transitory – But the Fed’s Credibility Is - 18th Nov 21
The real reason Facebook just went “all in” on the metaverse - 18th Nov 21
Biden Signs a Bill to Revive Infrastructure… and Gold! - 18th Nov 21
Silver vs US Dollar - 17th Nov 21
Silver Supply and Demand Balance - 17th Nov 21
Sentiment Speaks: This Stock Market Makes Absolutely No Sense - 17th Nov 21
Biden Spending to Build Back Stagflation - 17th Nov 21
Meshing Cryptocurrency Wealth Generation With Global Fiat Money Demise - 17th Nov 21
Dow Stock Market Trend Forecast Into Mid 2022 - 16th Nov 21
Stock Market Minor Cycle Correcting - 16th Nov 21
The INFLATION MEGA-TREND - Ripples of Deflation on an Ocean of Inflation! - 16th Nov 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Major Top in Gold this Year ? - Elliott 5th Wave Peak ?

Commodities / Forecasts & Technical Analysis Feb 28, 2007 - 06:23 PM GMT

By: Roland_Watson

Commodities

Gold and silver were caught in the downdraft of selling on the stock exchanges today but having surged from last October's lows, a respite was always looming as the price increased.

However, the subject of this article is not the short-term movement of gold but where the next major sell point will be. There are various commentaries suggesting that gold will move fairly easily into quadruple digits with some breath to spare. I agree with these analysts that gold will move into four figures and then some. The only argument is when?


To put it briefly, I believe gold will move higher but there is coming a major correction to outdo all that has come before it since 1999. I think it will happen this year and we will after it have another great buying opportunity in gold and silver. However, to be caught in it without taking some money off the table could prove demotivating for some investors in the precious metals.

There are several reasons why this may be so. The first is that my own Silver Leverage Indicator is refusing to drop with any vigour. The second is the Elliott Wave analysis of gold.

The issue lies in Elliott Wave analysis and when this gold bull market actually started. Did it begin in 1999 with the Washington Gold Agreement or later in 2001? The answer is crucial and affects the overall analysis. A typical Elliott Wave analysis based on a 1999 start may look like the chart below.

The gold bull starts at wave 1 in 1999 and progresses on to our recent highs of $731 with the ensuing correction. The alternate counts for waves 3 and 4 are given in parentheses. So, according to the main wave count here, the good times are just starting for gold with a higher degree wave 3 at the top right of the chart.

Okay, that may be acceptable but a couple of thoughts were nagging at me. The first was brought when I examined the same gold chart in Canadian dollars. The reason I bring up this chart is because if this is a real gold bull market, it will be international. And if it is international, we should expect similar wave counts in other currencies. If we don't the wave count is brought into question.

Note that if we follow the same pattern for the "Loonie" we run into trouble. A major rule of classical Elliott Wave is that the lowest price of wave 4 cannot be less than the highest price of wave 2. In other words, wave 4 cannot intrude into wave 2 territory. In this chart it clearly does as it cuts below the "VIOLATION!" line. In fact, if this were an OHLC chart, the incursion would be even more noticeable.

In that light, we reject the main wave numbering for the ones in parentheses. In the new number scheme, the wave follows the preferred guideline called "alternation" where Waves 2 and 4 usually alternate between Zigzag and Flat or between a Triangle and a Flat. Moreover, wave 3 is the longest wave and is not the shortest (which would be another rule violation).

Now some may object to this by saying that in this enlightened age is okay for waves 2 and 4 to cohabit. I do not accept this relaxation of the rules mainly because the less rules there is the more ambiguous the wave patterns will be with subsequent false sell and buy signals.

But one more clinching argument comes from the world of gold stocks. When did the bull market in gold mining stocks begin? A look at the HUI chart below leaves us in no doubt to that answer.

The Elliott wave pattern on the HUI is pretty clean with a final wave 5 in the offing. Wave 3 only lasted one year and we don't expect much more of wave 5 as it spikes to end phase one of the 30-year gold bull market. I also expect it to at least match wave 3, but in the madness of a final buying frenzy, who knows?

To confirm that HUI wave count, I also include the venerable Barron's Gold Mining Index for the same period (see chart below). Wave 3 is greater in size than wave 1 but again, we wonder where the final wave 5 will end? We note that the Barron's Index set all time high back in 1980 of nearly 1300. So far, 1175 is the highest closing weekly price.

So, an expected end to the first stage of the great gold bull is approaching this year. That of course is only my opinion but we think that the other indicators are pointing that way too. What about that vicious correction I talked about? Since the degree of correction will be less than the higher one that started the great gold bear of 1980-2001 but more than the ones we have witnessed since 2001, we think it will lie somewhere in between. I think you may agree that is a correction worth taking some money off the table for. The task before us is deciding where that top may be. That is where we hope other indicators will help, but that is another subject.

But once it hits bottom in 2008 or 2009, all I can say is keep that money handy, you'll be needing it again to load the gold and silver boat again!

By Roland Watson
http://silveranalyst.blogspot.com

Further analysis and comment on the silver market can be read in the subscriber-only Silver Analyst newsletter described at http://silveranalyst.blogspot.com where readers can obtain the first issue free. Comments and questions are also invited via email to silveranalysis@yahoo.co.uk .


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in