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Market Sentiment At Its Lowest In 10 Months

Market Sentiment At Its Lowest In 10 Months

Stocks sold off last week…

The Problem With Modern Monetary Theory

The Problem With Modern Monetary Theory

Modern monetary theory has been…

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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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