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Stocks sold off last week…

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What's Going On With Gold?

Gold is forming a Minor degree wave 4 Symmetrical Triangle, which is a consolidation pattern of the Minor degree wave 3 rally that started back in 2001 and extended into the May 12th, 2006 top. It means Gold is headed much higher once the triangle completes, into a Minor degree wave 5 up. If Gold drops below $540, then the alternate labeling showing a wave c-down of 2 down correction is occurring. Once complete, Intermediate wave 3 up should catapult Gold to new frontiers. Any way you cut it, a huge rally is coming in Gold, and should be well underway by late 2006.

The EW labeling for the HUI shows that Intermediate degree wave 1 up completed on May 11th. Since then, we see a three wave "Flat" for Intermediate degree wave 2 down, correcting Intermediate 1 up. So far, Minor wave "a" down finished in June, wave b up was a three-wave affair ending with a small Rising Bearish Wedge, a.k.a. Ending Diagonal Triangle, complete with a spike throwover, which was promptly followed by a vertical plunge in the HUI, Minor degree wave c down, which is still in process. What looked like an Ascending Triangle morphed into the Ending Diagonal Triangle.

Instructive is that what followed the spike throw-over in the HUI is what we expect to occur in major equity averages that sport a similar Rising Bearish Wedge Ending Diagonal pattern.

Minor degree wave c down of 2 down is still in process and could take the HUI down to the 260 area should wave 2 down want to correct a Fibonacci phi .618 of 1 up, a run that lasted from May 2005 through May 2006.

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"And as for me, I know that my Redeemer lives,
And at the last, He will take His stand on the earth."

Job 19:25

 

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