Elliot Wave suggests gold correction is over, heading for 200% gains

Alf Field
There is a strong probability that the correction in the price ofGold  has been completed. In Elliot Wave (EW) terms, the correction consists of three waves, an A wave down, a B wave rally and a final C wave decline. There is usually a relationship between the A and C waves. Often they are equal or have a Fibonacci connection.


The  chart below  is of the gold price using PM fixings:

In this case, the A and C waves are equal in percentage terms at 14.5% and 14.7%. The overall decline from $1895 to $1531 is -$364 or -19.2%. My speech to the Sydney Gold Symposium last November - showed that the largest corrections in the previous Intermediate wave from $700 to $1895 were about 12% in PM fixings. The forecast was that the current correction from $1895 would be one degree of magnitude larger than 12%. A decline of 19.2% qualifies as one degree larger than 12%.

An interesting observation is that if 12% is multiplied by the Fibonacci relationship of 1.618, the result is 19.4%, very close to the actual 19.2% decline for the correction. The chart below is of the gold price in COMEX 2mth forward prices:

The Gold Symposium speech suggested that the correction would be between 21% and 26% in spot gold prices. The actual decline was from $1920 to $1523, a loss of -$397, or -20.7%. This is just below the target range but qualifies as one degree larger than the 14% corrections in the previous up move from $680 to $1913.

The C wave of the correction in the chart above reveals some symmetrical subdivisions which confirm that the C wave was completed at $1523 on 29 December 2012. With all the minor waves in place and with the correction being of the correct size, that should be the end of both the correction and Intermediate Wave II.

The probability of this analysis being correct is high, perhaps 75%? Smaller probabilities allow for: (i) this to be an A wave of a larger magnitude correction (ii) the current correction becoming more complex, perhaps reaching the lower price targets (e.g. -26%) and (iii) the possibility of deflation, defaults and depression emerging, also testing lower price targets.

The up move just starting should thus be Intermediate Wave III of Major Wave THREE, the longest and strongest portion of the bull market. The gain in Intermediate Wave I from $680 to $1913 was 181%.The gain in Intermediate Wave III should be larger, at least a 200% gain. A gain of this magnitude starting from $1523 targets a price over $4,500. The largest corrections on the way to this target, of which there should be two, should be in the 12% to 14% range.


Source:  goldeagle 

 

Gold rebounds and gains momentum

By P Randomski
Gold rallied this week hitting its highest in a month and breaking above its 200-day moving average. There were a myriad of reasons suggested in the financial press. Some writers said it was a stronger euro that helped boost the price above the key technical level.

One headline said it was due to a buying binge from China ahead of the Lunar New Year which begins January 23. (The country imported a record 103 tons of  Gold  from Hong Kong in November, up 19% month-on-month and a 483% increase year-on-year.) Another headline attributed the rise in the price of gold to active demand from India where consumers took advantage of a drop in local prices to stock up ahead of the wedding season beginning later this month. Whatever the reason, we gave you a heads up as long ago as on January 3rd, when we wrote in our essay on a bottom in the precious metals sector:

The fact is that " breakdowns" similar to the one we're seeing just now have been (in all cases seen on the chart) followed by the final bottom of the consolidation (not too far below the line that is has broken), which was in turn was followed by a strong rally. In these cases, lower prices were never seen thereafter. Consequently, from both fundamental and technical perspectives, gold remains in a bull market, and what we're seeing right now may be the best buying opportunity that we'll see in the coming years.

Seasoned gold investors know that gold prices can be quite volatile - with big upswings often followed by big downswings, albeit wrapped around a rising long-term trend. At every downturn the gold bears have come out of the woodwork. And just as they have been repeatedly wrong in the past decade, they are still wrong (in our opinion) in 2012. Before this week's rise, the Wall Street Journal wrote an obituary for gold as a safe haven. The article by Stephen L. Bernard said that " it turns out gold is just another metal after all." It noted that after trading for much of 2011 as a safe haven, gold is acting more like other commodities and riskier assets these days.

For much of the past two years, when the economic slowdown and European debt crisis sent investors looking for low-risk assets, gold traded in the opposite direction of the euro. Gold could return to its safe-haven status again if the Federal Reserve embarks on another round of bond buying, which would likely hurt the dollar, analysts said.  Gold  is priced in dollars so it becomes cheaper to buy using other currencies when the dollar weakens. It can also serve as an alternative safe haven when U.S. currency loses its appeal.

At Sunshine Profits we are far away from writing the obituary for gold. At this point there are no indications that gold would not be up again in 2012 - so the trend should remain in place.

Even if you're extremely bullish on gold in the long-term, you may want to know what the short-term outlook for gold is. Let's begin the technical part with the analysis of gold to bonds ratio (charts courtesy by  http://stockcharts.com.)

In the gold to bonds ratio chart, we also see bullish signs. The recent bottom formed close to the long-term support level and the index is now right at it after a period of zigzag correction. When comparing current patterns with the trend seen in 2006, it seems likely that a move to the upside will be seen from here.

In the long-term chart of gold from a non-USD perspective, we can see that prices are clearly back within the rising trend channel. The pattern here is very similar to what was seen in the middle of 2011 and suggests that a powerful rally without a significant pause is quite possible. After such a rally, a prolonged consolidation would be probable once new highs have been reached. The implications here are different than from the comparison between today and 2006 - consolidation at previous highs vs. no consolidation. However, in any of these scenarios, the weeks ahead should see higher gold prices - also from a non-USD perspective.

In the short-term GLD ETF chart, we see that gold is about to reach the upper border of the declining trend channel and its 50-day moving average. We could see a pause and possible consolidation around this $163 price level. The outlook will remain bullish here unless a top forms and a decline is seen on significant volume. On the other hand, if the decline takes place above the $163 level and takes gold no lower than to this particular level, it would be a very bullish development and we would likely consider adding to long positions


Source:  sunshineprofits 

 

 

Gold 2012: Goldman maintains 12-month target of $1,940/oz

LONDON (Commodity Online):  Goldman Sachs is maintaining its 12-month target of $1,940 an ounce for gold. The metal fell in December in a scramble for U.S. dollar liquidity by European banks, which led them to lease  Gold  for U.S. dollars, in turn driving gold lease rates lower.

While gold has retraced more than half of December’s decline, Goldman says the downward pressure from European bank funding issues has left gold prices at a steep discount to levels suggested by 10-year yields of Treasury Inflation-Protected Securities.

“As European funding pressures ease, we expect  Gold  prices to converge upwards, back to levels implied by U.S. real interest rates,” Goldman said.

Goldman believes that many European banks will likely exit or sell many of their dollar-based businesses in 2012, substantially reducing dollar demand from the gold market, taking pressure off gold lease rates, and pushing gold prices back up in line with real interest rates.


“Further, following ECB’s aggressive action on funding through the Long-Term Refinancing Operation (LTRO), the near-term pressure on European bank funding has eased significantly,” Goldman concluded. 

Gold: Current bull market is a carbon copy of the 1970's bull market

By Hubert Moolman
Below, is a  Gold  alert sent to my premium subscribers, on 5 January 2012. The patterns indicated, suggest that we will have a massive rally in gold over the coming months.

Below, is a  graphic that compares the gold chart from 1998 to present, to that of 1975 to 1979.

 

The current pattern is much larger than the 70s pattern and also more complex. I have marked both patterns (1 to 7) to illustrate  how the patterns could be similar. If my comparison is justified then  we will have a massive rally over the next months.
The following chart illustrates the existence of a short-term fractal (pointed out by one of my readers) that confirms the bullish expectation suggested by the long-term fractal above.

On the  Gold  chart, I have indicated two patterns by marking similar points (1 to 10) on both. The two patterns are very similar looking. If the similarity continues, we will have a massive rally (in fact, it suggests that we are already in that rally).

So where does this leave us? It would appear that gold is looking extremely bullish, as you can see in the above chart. If my comparison of the patterns is accurate, then  gold should rise like it did from 1 July 2011 to 23 August however, this time the move would be much bigger and with much more momentum.

Source:  hubertmoolman

 

Gold & Silver: Deflationary downward wave

The last few weeks have been confusing. And that was the clear contradiction between the bearish price patterns that emerged in the case of  Gold  and  Silver  (and to a large top and a brutal wave of deflationary downward pointing) and the seemingly bullish Commitments of Traders (COT) structure in the precious metals sector. For the COT developments, we now seem to have an explanation, which we discuss later. But first let's take a look at the development of price patterns.

Inveterate cops talking excitedly about " the great buying opportunity" , which is currently present themselves after the recent price losses in gold. This is logical and understandable, since gold is trading now around $ 300 below the highs from August to September 2011, is oversold also located in the vicinity of his still rising 200-day moving average, also show the COT data and sentiment indicators is positive.

Make Despite all this, is in gold and silver just emerging price patterns extremely bearish impression. How can we in the 2-year chart to see for gold, has since reached the top's a big bearish Declining triangle above a clearly marked support zone between $ 1,520 developed and $ 1,530. If gold does not break this pattern with a rise above the upper limit (the red trend line on the chart), then break the gold price - which is practically marked the end of the bull market.

And the implication requires the insertion (or rather the rapid spread) of a deflationary downward wave - a wave that many countries will flood, where the worst consequences have so far been spared, such as the debt-ridden United Kingdom and the United States of America. If you want to know how bad it can be, then they look at the recent events in Greece and Spain. With food shortages, riots and burning cities, everything could be much worse.

At this point we want to respond briefly to the debate about deflation-inflation. The world needs a full-blown deflationary downward wave - and sooner or later they will get it. Her evolutionary purpose is the elimination of massive debt and derivatives mountains, which take over the world economy into the abyss.

Inevitably, it must come also to the elimination of parasitic institutions that have brought the current chaos along the way: the zombie banks and the " too-big-too-fail collaborations," their trunks - on rescue packages and other perks such as extremely low interest rates -. very deeply in the public coffers since jumped the crisis in 2008, the center of attention, try-established and powerful interests to block the necessary deflationary Cleaning - by money flooding, manipulation of the yield curve and by the mobilization of states / central banks cut interest rates to artificially - change place so they could continue to perform their powerful, privileged life and had more time to their bad debts on the taxpayer. But it seems for the time begins now. Their last trick was the secret financing of the ECB by the Federal Reserve - a desperate attempt to halt the collapse of Europe.

But the situation in Europe is now so bad that the success of these measures are doubtful. It appears that will happen the following: The bond holders will take a chance and respond to mass sales, after which the interest rates sky-rocket. And that happens this time in the U.S., so the whole bloated construct will collapse quickly. That will tell us the ominous patterns in  Gold  and silver. Blocking the necessary deflationary forces and the decisive action of powerful interests since 2008 have led to the further strengthening of deflationary forces, so that a dangerously explosive situation has arisen. In the short term remains to be scope for a recovery that gold to red reversal line of the could bring sinking triangle (see 6-month chart). We had positioned ourselves in the sector, just before this one week before slowly recovering from its lows.

At that time we had a very low-risk phase of the market - you could equate tight stops below the key support levels at the lower end of the triangle. The probability of such a recovery is increasing, because seems to be emerging a small head and shoulders pattern (see chart). We will try to bring moderate gains when gold approaches the red downtrend line - the rally should ever come that far. But consider the longer term, the triangle formation in the gold chart will probably be broken down, which would then likely to  Lead  to a severe slump.



The dollar charts are based at least in our estimation, that will soon come a deflationary downward wave. For as we see in the 4-year chart for the dollar index, the head and shoulders pattern was broken by recent above. It looks as if the index would be close to a strong upward movement, which could extend into the vicinity of the resistance between 87.50 -89 - ie in the range of those peak levels that were achieved in the years 2009 and 2010. The 2009 high was from the stampede into the dollar, to which it was due to the financial crisis in 2008.



As far as the explanation for the seemingly bullish COT for gold and even silver, we want to refer to the following observations, which were published before Christmas, on our website: Until now we were more or less automatically assumed that the large speculators (large specs) that appear in the Gold and  Silver  COT, were always wrong. So far, also seemed to be: When large speculators clearly their long positions back, that's bullish. This was a reasonable presumption that the last 10 years worked on for the precious metals markets as well.

Whenever the long position of large speculators reached high levels, corrected the precious metals, and when they fell back to relatively low levels, the precious metals turned into a positive, upward trend in order to be recognized again. And that was the reason why we took them mercilessly poke fun at and called them idiots and fools. But the large speculators over the years were really wrong? At least they were during the entire gold and silver bull market ever long. So one has to add the correctness sake, that they are not taken as a whole were wrong. In their total correct long-positioning, but they responded with enthusiasm to the interim market tops and too negative or conservative in the interim market lows.Although the commercials all the  Gold  and  Silver  bull market were over short, she earned money by the emotional behavioral extremes of the large (and small) speculators in the interim market tops and -. Benefited lows in recent weeks, however, a fundamental change in the COT structures for the gold and silver markets, in which case the number of established large speculators long positions in gold and in silver, very clearly declined strikingly clear. Virtually everyone (up to now we were even more) these powerful long retreat from the large speculators as clearly bullish sign is interpreted. 

If we look at the COT charts look but now we see that it is not is a normal decline -. Just in silver Considering that the large speculators all precious metals bull market had been on long, it could be their unprecedented retreat from the long positions (the first glance might be interpreted bullish) quite well for something else back: You may have the big speculators decided that either the gold and silver bull market is over or at least a brutal deflationary Selloff as 2008 or even worse threat. And that fits well to the negative impression, make the price charts for gold, silver and precious metals to date. In recent weeks, all of these charts had to suffer first technical break-ins - and we are aware that these intrusions may also be the result of a deliberate " Chart cleanup action" by the " Big Money" could be.

So far, the explanation that the large speculators " thin out" their positions ahead of a major bear market phase in gold and silver, pure theory. In any case, but it fits to the ominous patterns that emerge in Gold, Silver and EM equity indices. And it also fits with the horrific prospects for the year 2012. 2012 could be a year in which the cause for so long held back (and more and more debt derivatives significantly strengthened) deflationary forces finally chaos to the world markets and economies. 

This is the essential and bitter medicine that the world needs to get rid of their debt and derivatives goiter - and of parasitic institutions such as zombie banks and elite cooperation, every crack and everything into the abyss. There is another aspect influencing the gold and silver prices and consideration needs to find. And so the growing likelihood of a military intervention against Iran is meant. The " Axis powers" , ie Great Britain, Israel and the U.S. strive for a long time for hegemony in the Middle East, control, and that for geopolitical reasons and to the country's oil reserves can be. 

On the way to their long-term goals for this region in recent years made ​ ​ great progress. would be at this point to emphasize that the term " axis" is not used here condemning other than George W. Bush, of an " axis spoke of evil " . The term refers only to a nearly congruent military and political orientation of the elites of those countries and on their common goals. Middle East countries like Saudi Arabia and the UAE are as loyal client states already " on their side." States such as Afghanistan and Iraq who opposed the Axis, experienced invasions, they have been neutered and fitted with puppet governments. 

Remaining, the axis of hostile states are being undermined by this government to be overthrown - for example, in Libya, where the case was already successful on the stage and Syria, where the work is yet to make it. This is still waiting for a big ripe fruit on it, in to drop the basket of the Axis powers - and Iran. And of this fruit you will probably have to help with a stick, so they finally dissolves. From the perspective of the axis, there is nothing to lose and potentially much to gain if it provokes a conflict with Iran. 

With the help of more stringent sanctions, etc, etc. The thumb screws are tightened continuously. Moreover, time is short because the economies are the Axis powers due to excessive debt just before the collapse and the massive military machine may no longer be maintained for long. Would they be able to provoke Iran into a careless step, such as the blockade of the Strait of Hormuz, they would have the perfect excuse to Iran to bomb into submission and then remove all its military and nuclear facilities.

The creation an external enemy would immediately increase the popularity of local politicians, like Barack Obama, who can speak profile as a " hard man" , whom the American voters like. And 2012 is selected. In addition, you will also need a lot of equipment, weapons and ammunition during the dispersal of Iran. And that in turn is good news for the defense industry, received by the large orders to replenish stocks. Once Iran and Syria have fallen, the axis will control virtually the entire Middle East. One of the tasks, the UK, takes over as the leading member axis and begrudge member of the EU, by the way, the power limit of Europe. 

For this reason, the Brits blow again and again " sand in the wheels" when they load, for example, vetoed in contract decisions, just as only became clear. One factor may, however, the ruling in Great Britain " island mentality" to be. Older readers may perhaps remember the hilarious headline that was read many years ago in a British newspaper: " Fog in Channel, Europe cut off." What the British attitude was summarized nicely with the rest of Europe. Interesting also the setting of the Axis powers towards China and Asia generally. This became very clear a few weeks ago when China is hardly an enemy Verholen equated and announced that they wanted to ask as Australia's best friend, to form a military alliance against China's influence in the Pacific field. Apparently, Chinese and Asians are not generally welcomed in the club activities, and behind the niceties of diplomacy, they are regarded as strangers. 

Very similar to how we look at the Klingons in Star Trek One well placed to mention hardly that an attack on Iran most likely pull a sudden oil price leap would (also rising  Gold  and  Silver  prices would then be expected). For obvious reasons, the exact timing of an attack can not predict, of course - it could be in the next two months to be the case or before 10 months. With the onset of a deflationary downward wave of an attack is more likely, however, because under these circumstances, the politicians are looking for a distraction for the masses, they are united and stand behind the closed can. Even if from the Gold and Silver Charts expect heavy losses, one should not forget that an escalating Iran conflict could always price jumps call on the plan. 

In case we do not drop as early as expected in the deflationary abyss, then would be the best selection of raw material oil well. Because current supply constraints show effects that are still due to Produktionsdrosslungen after the 2008 financial crisis (like the well-known oil expert Dr. Kent Moors shows). Production was then moved back because of the low price range.This will keep oil prices stable and perhaps even provide for significant capital gains, provided that the deflationary downward wave does not hit before too. And those gains in the event of military action against, or would receive an additional thrust through Iran. On our website we will therefore deal with the near term oil and oil-related investments.

Silver Market Update
in the silver chart seems to find a very negative acting head and shoulders top formation graduated, reflecting heavy losses and therefore indicative of the occurrence of a deflationary downward wave. In recent weeks, the overall picture, however, by the COT structure and mood indicators (both of which make a very bullish impression) more complicated. For the reasons stated in the Gold Market update, it is assumed that the COT gives a very misleading impression of the current situation. 

In the case of a severe slump and losses could still achieve even worse mood indicators (ie even more bullish) levels. The top of the large head and shoulders pattern can be well seen in the 2-year silver chart.The remarkable thing about this pattern is that the " neckline" or the lower support line is perfectly horizontal, while the silver price at the end of its September-December EXACTLY bounced off day's low. This large top area appears complete, although indicating the price movements of the past few weeks that we will see a final rest before silver breaks through the support at the lower end of the pattern. 

It can hardly be said, making the bearish implications of this pattern could be stopped - by one point over the right shoulder at $ 35.70 would be a bullish development, but not convincing. It is probably better to tie up such a development in a trend reversal in gold: A break of the top line of the triangle would be sinking here may break the bearish pattern in gold and in silver.



Even if the longer-term silver charts look pretty rough, so the recent market movements lay in the short-term 6-month chart, even the possibility of a short term rally near. It seems to have been formed, indicating the progress that could penetrate even to the $ 33 mark on the recent low, a small head and shoulders bottom - before prices give back. One possible scenario is shown in the chart below. Shortly after the low was reached, we were just in a little risky market environment long, with a stop was placed just below the key support level and above the September lows. We will probably bring moderate gains should strive silver in the near future on the $ 33 mark. And depending on the then prevailing situation, we would then switch to the short side.





Source: Clivemaund.com 

Charting the gold price back to the year 1265

We have often seen requests to show the price of  Goldgoing back as long as possible. The graph shown below is a gold price chart, indexed in 2010 British Pounds and going all the way back to the year 1265.

To the surprise of many, the 'early 1980's gold price surge' is not the only time in history when gold exploded as America's game with inflation was almost lost. It appears that based on the surge in gold back in the late 15th century, there was actually quite a serious need for Columbus to go forth and find a source of gold, because last we checked Ferdinand and Isabella did not have Bernanke's money printers back then.


And yes, as Goldman says, there were no ETFs back in the 16th century to draw demand away from the real deal and into make-believe exposure.


And more or less the same in (synthetic) USD terms:








Source:  ZeroHedge