IAU is a very popular ETF that tracks the price of gold. It acts very close to what I see in the cash futures charts and GLD is basically the same. Since the gold top in 2011, which corresponded with the first peak of solar cycle #24. When this happens, it also tells me that 2011 was a major peak in gold, and I see it as a Cycle degree wave 3 top. This top is so isolated that there should be no doubt about which peak is the real one.
All analysts forget this top as they think a new leg up has started. I see it as a bear market rally and an Intermediate degree bear market rally. If gold bulls are this easy to fool and can’t tell when a bear market rally has taken place, then any “B” wave bull market in primary degree will really confuse them.
I have experienced moves like this before where the bottom falls out and IAU implodes. The rally that started in 2017 was choppy all the way up, as violent moves in both directions were happening. These choppy rallies are a clear sign that IAU has been going against the larger trend. I see it as a triangle inside a “B” wave of a zigzag 5th wave decline. There doesn’t even have to be any clear subdivisions as this is a potential “C” wave crash.
This morning I added a small short position in IAU, as it is a good time to test the next bearish phase. In most cases like this, the bottom trend line will get sliced in two, but it would find major support at the 2008 low. Most investors are never prepared for something like this to happen, but when bullish bets do not do what you expect, then you have to invert your thinking to the bearish side.
A long grinding summer bear market in gold stocks can happen, with a potential bottom in October or November 2018.
This IAU ETF seems to be very popular, but this morning the volume is around 500,000 shares traded. I like to look at other gold related charts as little differences can give a certain location hint. One of the worst to recognize early is the darn expanded wave 3 bottom. Expanded flats are critical to understand as they are fake bull markets and if it is identified correctly, then a new record low is a given. Most gold stocks, ETFs sure don’t look like this as some of them went sideways while others were pointed down. Analysts have faced this dilemma before as they were all wondering why gold stock ETFs were not catching up to gold.
This is not a gold stock, ETF, as it seems to follow the futures metal very well. I have many of these 3-4-5 wave counts in progress and they must constantly be checked if bull markets don’t behave like they should. This gold rally keeps us blinded by the bullish hype from the mainstream news. When the news drums beat in one direction, I look at the opposite direction long before the herd catches on. This IAU has not broken out of resistance yet, but this morning IAU made a small bullish move. The herd will not see any potential bearish moves until some key support price levels get retraced.
If you think gold can’t hit another ugly low, then my wave counts will not matter to you at all, but if you’re not sure then welcome to the club!
Sooner or later, this gold ETF will send us a clear picture because it can’t fake a bull market forever. At this time, IAU has not exceeded that mid 2017 peak, which still keeps the zigzag within the “B” wave rules. Since I don’t have US funds to work with, anything I might buy at a major low will be in Canadian funds.
I remain very bearish as many of these commodities could slump together, surprising even the staunches gold bulls.