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Gold

Hi! I am a retired CMT (Chartered Market Technician) and I write exclusively here.

Gold 10-Year Chart

Gold continues in a sustained uptrend. Note the timid, tentative nature of sentiment & advance - so often found in early stage bull markets. As the adage states 'buy hesitance sell confidence'. Also note the cup & handle nature of the advance. This breakout could take us to $1350 before profit taking. THIS HOWEVER IS NOT AN EARLY BULL MARKET!

That gold could have completed Elliott Wave III amid a general level of consumer and industrial skepticism is beyond comprehension. But first and foremost ,we ask the charts. The breaking of $1000 was accomplished (or caused) by the last major hedger ending forward sales. The response to the last seller leaving the stage was a swift 20% rally before correction. Meanwhile, I attended a seminar in February where a respected figure within the gold industry informed a disheartened roomful of gold bugs that indeed - "The fat lady was singing!" So much for irrational exuberance. I talk to many average and, informed investors who cannot fathom gold's role in the investment equation. Cannot envision gold at higher prices. A most peculiar phenomena. This despite a decade long rally that has seen gold rise five times against the U.S. currency.

Not the situation in 1980, I assure you. I was there when the Hunt's were cornering the silver market. Metals fever abounded along with 18% rates! Perhaps this is the 'crux of the conundrum': gold, a traditional inflationary hedge does not automatically attract investor attention in an era of disinflation/deflation. A generation of investors have witnessed an expansion of fiat currencies, abetting unprecedented economic expansion. After all, gold produces nothing, earns nothing. Nevertheless, this undulating cup & handle pattern continues month after month as the smart money accumulates. Shhh!

Trend lines indicate a well supported rally, fully 10 years old, with measured ascending undulations. Reminds this observer of the DJIA in the mid- 80's. My favored Elliott Wave count: Wave I $246 - $461 +186% / Wave III $461 - $1226 +226%. Dividing Wave I /Wave III : yields a factor of 1.49; which we ascribe to Wave V. $1226 x 1.49 = $1830. A cursory benchmark. Alternative wave counts also augur for prices above $ 1550. I continue to believe Wave III ended with the extreme November 2009 sentiment readings. After a six-month correction Wave V has begun.

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