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Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Has Gold Topped Out? Nope, You Ain’t Seen Nothing, Yet!

Commodities / Gold and Silver 2011 Jan 17, 2011 - 12:44 PM GMT

By: Lorimer_Wilson

Commodities Best Financial Markets Analysis ArticleGoldrunner writes: A Gold Bull Market is much like a bucking bronco in the Old West – constantly trying to buck investors out of the saddle – as many in the Precious Metals universe are calling an intermediate-term top for Gold.  Some are even suggesting that we have seen the final top in this Historic Gold Bull. We have a completely different view maintaining that we are very close to the juncture where Gold starts another rip higher into May or June. Let me explain.


We believe such a significant move will just be one more step up for the developing Gold parabola that we have been following via the 1970’s Gold Fractal Chart and will usher in a more parabolic rise on the chart.

A Look At The Arithmetic $Gold Chart
The chart below is almost as significant as the Fractal Gold Chart we follow off of the late 70’s.  In it I have drawn the channels that correspond to the basic Elliot Wave structure of the developing Gold parabola with the equivalent of the Wave I channel in blue, the equivalent of the Wave III channel in green and the proposed Wave V channel in red. 

Gold Observation #1
You will note that Gold has risen out of the top of the Wave III channel and currently has consolidated above that Wave III channel top.  Currently, Gold has retraced back down to re-test the Wave III channel top.  We don’t know if Gold will re-trace a bit deeper at this juncture but we certainly believe that the next move up that breaks above the consolidation top will lead to a very aggressive move higher.

Gold Observation #2
You will also note in the chart that as the Gold parabola unfolds each “wave channel” expands to allow for the parabolic rise in Gold as the slope of the rise increases.  Notice how Gold rose above the Wave I channel and consolidated above it back in the 4th quarter of 2005.  We believe that Gold is currently at a similar juncture above the Wave III channel.  We expect the price chart of Gold to resolve to the upside very much like it did in the late 2005 time period. 

Observation #3
This chart has one more bit of significance.  We have shown the fractal charts of the HUI Index in a number of articles fairly recently (See here and here).  The (current) fractal relationships to the HUI’s current move relate to early 2002 and to late 2005.  As Gold is consolidating and re-testing the Wave III channel top, the HUI is back testing its break-out of the old top.  This confirms the fractal relationship of Gold to the PM stocks in terms of the HUI Index

Short-Term Projection For Price of Gold – $1,975 by May/June
The channel top for Gold on the log chart lies up around $1975 into May/ June 2011.  Is it possible that Gold will go parabolic to the point that it will burst through the channel top on the log chart before consolidating above it?  We know that even a log chart did not contain the price rise in Gold in the late 70’s.  The Gold Parabola rise tends to keep investors nervous – potentially selling too soon, then chasing price higher. 

Jesse Livermore is quoted as having said the following about a Gold Bull Market: “Get right, and sit tight.”  It seems that even the best of the best have struggled to stay in the saddle of historic gold bulls – so hang in there!

GOLDRUNNER

Goldrunner is a frequent contributor to www.FinancialArticleSummariesToday.com  and www.munKNEE.com  and you can receive information about our new subscription website once it is active by dropping us a note at Goldrunner44@aol.com. You are also encouraged to sign up for munKNEE’s  FREE weekly “Top 100 Stock Market, Asset Ratio & Economic Indicators in Review” which will begin early in 2011.

Disclaimer: Please understand that the above is just the opinion of a small fish in a large sea.  None of the above is intended as investment advice, but merely an opinion of the potential of what might be.  Simply put:

The above is a matter of opinion and is not intended as investment advice. Information and analysis above are derived from sources and utilizing methods believed reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Comments within the text should not be construed as specific recommendations to buy or sell securities. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities. Do your own due diligence regarding personal investment decisions.


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