Thursday, June 20, 2013

The Gold Bear downside target:

The current bear in the precious metal complex has served up many conflicting opinions from the analysts to include the gold bugs, mining analysts, fund managers and mining operators. If we look at a long term chart – semi-log scale (of course) we can tune out all of the noise of FED tapering, inflation, China, India, physical demand and the liquidation of the gold ETFs.

I am displaying a 15-year chart of the continual gold contract which includes the tail end of the 1980 – 1998 secular bear and the cycle count of the current secular bull.

First – note the current cycle count – now forming a trough at cycle # 5. A secular bull will normally contain at least 7 cycles so we can look forward to at least 2 more cycles before the current advance is over. Note the two Elliott Wave corrections reactive wave 2 and 4 followed by a final advance to the August 2001 peak and then introducing a classic A-B-C type correction

Second – note that very long term primary trend line (black) and the shorter secondary trend line (red). The secondary trend line was broken when gold broke $1400 and now the ultimate target is the primary trend line currently at $1150 and rising. In summary at the current $1284 there could be another $150 left on the downside, so we are almost there. We went through this peak and crash down to trend line stuff with the Apple - $700 to $400 correction on a post Wednesday, January 9, 2013 Apple Charting.

Keep in mid if we bounce from here that red secondary trend line (extended) will become overhead resistance.

1 comment:

Shawn Severin said...

Hi Bill,

Where do you see the gold miners (GDX, GDXJ, XGD) going from here? They have lead gold on the way down. XMA has traded much the same way.