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Parabolic Moves - Gold vs. Nasdaq

Summary

Gold is parabolic and could easily reach 1300, 1370 and 1400 briefly before it turns down significantly, and may even extend its Bull run into the Cardinal Climax of August 2010. However, Gold will break sharply when the parabolic move ends and a break of 1190 would be the first sign of trouble this week, but the ETF would need to break below the bullish trend line near 116 this week to confirm the end of the parabolic move higher.

 

A #1 Gold Timer Digest - Tom O'Brien calls for a top in Gold on CNBC


Tom O'Brien made a call for a top in Gold on CNBC and since he is #1 Gold Timer Digest we should take his warning seriously and he is right to be cautious. However the best fit for long term Fibonacci extensions from the 1999 low with the Sept 1980 and May 2006 highs of 735, the March 2008 high of 1033 and the 1980 previous all time high is suggesting 1500 as a possible end to the 10 year move up and it looks like it should reach it before the next 8 year cycle high of 2012, even though the real end of the Gold Bull should only come with the 40 year cycle high of 2020.

Gold 30-Year Chart
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Courtesy of StockCharts.com

 

Gold is stronger than the Nasdaq in the 90's and yet no Barron's cover?


We should not underestimate Gold, since it is breaking out of the upper channel from the 1999 low which is quite a feat since that channel is even steeper than the Nasdaq in the 1990's and I call this a Super Fast trend that could go higher than most think before turning down. There is a lot of retail interest in Gold and Silver for sure and a top is close, but the Bull trend in Gold has been stronger than the Nasdaq Bull run of the 90's and has been the best investment of the decade but we have not seen a Barron's bullish cover on Gold yet, meaning there are still doubters and not everyone is on board which usually happens after a solid 10 year Bull run.

Gold 10-Year Chart
NASDAQ 1990-2000
Courtesy of StockCharts.com

 

Price and Time or where Cycles meet Geometry and Fibonacci


The geometry is pointing to 1300 by early June and if W5 = W1 we have a 1370 target and if W5 = W3 we have a 1400 target which is also a geometric target by June but that cycle has been off by a week or two in the past and is an 11 month cycle low, so it may end up being a short and sharp pull back as discussed below. The 8 month cycle is the most reliable since the July 2008 high when the credit crisis escalated and probably pushed many into Gold. The next 8 month cycle high is in early August and dead in the middle of the Cardinal Climax which I discussed previously here and could give us the parabolic move to the Fibonacci extension of 1500 and finally get that Barron's cover that Gold is no longer a relic but a modern day Wealth protection investment vehicle.

Gold Showing 22-month, 8-month, and 11-month Cycles
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The Cardinal Climax of August 2010 is a Solar Cycle date


The Cardinal Climax date of August 2010 may be a significant high for the Precious Metals since it is a 5.5-11 year Solar cycle that gave us the February 83, July 88, March 94, September 99, and December 04 (3 months early) highs, so we are just entering the 3 month window now and could see a high anytime, but the odds favor a July-August high and the last few months usually rise about 10% a month as can be seen in the chart of Silver below.

Gold 5.5-Year Cycle
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Shorter harmonics of the 11 year Solar cycle


Short term, Gold is acting a lot like it did 5.5 months ago or the 1/24th Harmonic of the 11 year Solar cycle, and the 1/96th Harmonic which is the 6 week cycle is suggesting a high for Options Expiration of the 21st and 24th. The current level of 122 is a Fib extension of the first move from 102 to 112 and could be the high, but 128 is the next Fib extension plus a geometric target and more probable, while the 125 level is a geometric target only and may only cause a pause. The 6 week cycle argues for a pull back into the 11 month cycle low of mid June and the next 6 week high to be near the July 4th Holiday on our way to a probable Cardinal Climax mid August 2010 high for the 5.5 year, 8 month and 6 week cycle high.

Gold and the 11-Year Solar Cycle
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Lately the Moon has been marking turns in Gold


Now that we have the bigger context, we can finally drill down to this week and since Gold has been making highs and lows about 3 days before the Moons, we are probably in a pullback that normally would end about 3 days before the next Full Moon and that is the 24th. However Moons can invert, especially when the pattern gets too obvious like this one and we may get an inversion here since both the 6 week and the 11 trading day cycles point to a high for the Full Moon. If the Gold ETF holds 119 it is in a very bullish position to make new highs, but it will need to break 116 this week to cancel the parabolic bullish trend and break the 2009 trend line near 111 to turn really bearish and reach the 1075 target that Tom O'Brien mentioned.

Gold with Moon Marking Turns
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