Gold, 2008-2016 Elliott Wave Count Review




The reason that gold has such a choppy wave pattern is because its bull market is a diagonal 5th wave in Intermediate degree which started back in April 2001, depending where we count from.  From the 2008 crash bottom, which is my Minor degree “B” wave, gold roared up in a wild ride to its 2011 peak of about $1920. This 2008 pattern can also fit into a triangle, which predicted another strong degree change as well. 

It wasn’t rocket science that gold was going to crash, but what was going to follow sure kept us guessing the majority of the time. Of course, this turned into a major gold bear market, as all rallies were completely retraced. I can turn the gold bear market into a triangle as well, just by increasing the degree level of the 2016 bull market, by one degree.  

I have repeated it many times that gold and gold stocks could be in a fake move as this gold and silver bullish phase started out very choppy.  Now that we have a peak that is 2 months old, we can draw the top trend line to help us to determine if the peak is real.  Of course, if gold is in a much bigger bull market, then that top line will get sliced, like a hot knife going through butter.

In the last 2 months any bullish support has not held, which is sending us a signal that gold and gold stocks, were in a bull trap at that June 2016 top.   If the top is in, along with gold stocks, then a complete retracement is the only option at this time. This may take much less time to confirm as all support price levels will not hold, no matter how much we wish for it to do so. 

I mentioned that George Soros had sold his shares of ABX, and now in hindsight, he may have been right on the money.  All very bullish wave forecasts were getting harder and harder to see, so when those options dwindle, then there should be a few more bearish options. 

The next few months will either make or break the bearish wave count.  I have no real news of any massive insider selling, as they all may be in a bull trap as well, besides, they are much richer than us and can handle any major decline.  

I’m tracking about six gold/gold stock related ratios, and I mentioned that gold stocks were getting a bit to the expensive side. The gold/gdx ratio, compressed to a bit under 43:1, with the max being around 29:1. Today we are sitting at about 48.44:1 as this ratio should keep on expanding for the rest of the year.

Next week I will keep exploring the bearish wave count, which should contain a zigzag. The zigzag will alternate and we should find out if gold goes below that $1303 price level.  Our next two price support levels would be around $1250, and then another about the $1205 price level.  After those two price levels we have nothing but open space, until we get down to that $1050 price level. 

Gold has no problem crashing $150-$200 when it wants to, so the next month or so gold should tell us on which side of the fence it was sitting on.

I could be wrong, but until we hit another bearish gold stock bottom, we have very little to rally from at this time. Fridays spike can also be a fake, and that should not take too long to confirm.   

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