Interesting to watch all of the Silver and Gold
Bears running out into the streets from their caves beating their chests due
to the silver shellacking we just saw. Getting jiggy
with the US Dollar rally is all the rage right now, and stomping on the
precious metals Bulls is the hot sport. The only problem is calling for a
crash after a crash is kind of like picking the winner of the NCAA tournament
at your office the day after the tournament ends. It’s rare to get a
crash on top of a crash, and trying to predict any crash is a fool’s
game anyways.
The reality is the US can’t even keep their
continually rising debt ceiling in check let alone run a normal break even
budget. The constant calls for the end of Q2 are kind of funny, because in
one form or another, we will see a Q3… call it what you will. Getting
on board now with being bearish on silver or gold and bullish on the US
dollar is probably going to be short lived near term. One of the
confirmations I look for at bottoms is not just with my Elliott Wave patterns
or charts, it’s headlines, forecasters, and erstwhile market seers are
going the same direction and high fiving each other. When everyone stops
trying to call the top in Gold and Silver, then we will probably have a major
top in 3 years or so, but not yet.
The dollar should bounce a bit higher yet between
76.20-77 ranges on this chart below then resume the decline. . Giving the Bin
Laden news credit for the Dollar rally is a bit silly to say the least; it
was overdue no matter what the news of the day was.
The bottom line is that Silver was likely to top in
the $45-$47 per ounce range after a huge rally from $26.50 whether or not the
COMEX raised equity requirements. I had forecasted a run to the $45 highs way
back in the mid 26’s for my subscribers. I had mentioned that as we
approach those highs, predicting the next “D wave” correction
would be very difficult indeed. Certainly the COMEX raising equity
requirements made that D wave that much more difficult to assess. The fact
that they did it four times in one week certainly sped up the correction and
caused an “overthrow bottom”.
Now if we can step back and take a deep breath, we
can see that Silver roughly retraced a Fibonacci 61% of the rally from 26.xx
to $49.xx and this is typical of a major wave correction in sentiment and
price. Gold has so far retraced 61% of its prior 3rd wave up, and that does
happen as well. Investors and forecasters simply like to use the day’s
headlines to explain the action, so they can feel justified with what just
occurred.
I believe that the headlines don’t much matter
during rallies or corrections. Instead what matters is typical crowd
behavioral patterns and trying to outline pivot highs and lows as best as I
can for my paying subscribers. With Gold’s recent bottom at 1462 being
a likely “A Wave” of an A B C correction, we then saw a “B
wave” rally as I forecasted would occur to “About $1520 or
so”, and then a C wave so far to a higher low than $1462. I thought the
pullback from the $1520 area would bottom at a higher level than $1462 and so
far that is still the case. I am looking for Gold to rally past $1577 and
complete a large 5 wave rally from October of 2008 at $1627 or higher. At
that time, or close to that time, you will then be wise to take a fair amount
of cash off the table.
Indeed, we have had a stellar rally in Gold and
Silver from the October 2008 lows and there will be eventually longer periods
of consolidations and corrective wave patterns to work that off. However, my
theory has been that we are in a 13 year bull cycle for the metals and this
is like 1997 in the Tech stocks, still a few good years left and probably one
of those 1999 years is still in front of us for the better gold/silver junior
exploration companies. Certainly after rallying from $681 in October of 2008
to the $1577 recent highs of April, we are getting a little long in the tooth
on this multi-wave pattern to the upside. This next top at $1627 or higher
will be followed by a multi-month corrective pattern, and I’ll keep my
subscribers on top of the coming moves as best as possible. Consider joining
us now and save 33% off the annual subscription covering Silver, Gold, and
the SP 500 with a 24 hour limited offer at www.MarketTrendForecast.com
and or sign up for occasional weekly reports.
David Banister
The Market Trend Forecast
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