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There is a high probability that the correction in
the gold price that started in early October at $1797 has been completed.
All the minor waves are in
place and the A and C wave portions are approximately equal at -$120 each.
The chart below depicts the action on COMEX via the 2 month forward chart:
 
The analysis of wave C is
as follows:
a. 1758 to 1687 -71
b. 1687 to 1727 +40
c. 1727 to 1636 -91
C. 1758 to 1636 -122
Wave a. at -$71 is 78% of wave c. at $91, an Elliott relationship.
Even the smaller c wave
portion of wave C has 5 small waves which have a neat Elliott configuration,
as follows:
Analysis of wave c of C:
i. 1727 to 1681 -46
ii. 1681 to 1706 +25
iii. 1706 to 1664 -42
iv. 1664 to 1680 +26
v. 1680 to 1636 -44
Wave c. 1727 to 1636 -91
Note that the corrective waves ii and iv are +25 and +26, confirming that they are
part of the same wave. The downward waves are within $2 of -$44 each. All
pretty neat.
The following chart of
the PM gold fixings was prepared a couple of weeks
ago to indicate the possible target low of $1642 for the end of the
correction:
Note that $1642 was also
the 61.8% retracement level as well as the point where waves A and C would
have been equal. That target of $1642 was not achieved, the lowest PM fix
being $1650 on Dec 20, 2012. There was a slightly lower morning fix the next day,
but there is enough evidence when combined with the Comex
gold chart to conclude that the correction from $1797 has been completed.
Obviously a decline to
below $1636 would render this analysis valueless and we would have to
reconsider the situation. The PM fix on Jan 2, 2013 was $1693, so there is
already some upward movement on the scale that one should now expect.
Once $1800 is taken out
on the upside, the gold chart will look tremendous. A beautiful "cup and
handle" base would then provide strong support for a vigorous upward
climb in the precious metal. At this stage there is no reason to abandon the
rough target of $4500 for this coming upward wave. Once we have the next upleg above $1800 in place, it will be possible to start
refining this target.
It seems that gold is
well set up for a spectacular year in 2013.
Alf Field
Comments to: alffield7@gmail.com
Disclosure and Disclaimer Statement: The author advises that he is not a disinterested
party in that he has personal investments gold and silver bullion, gold and
silver mining shares as well as in base metal and uranium mining companies.
The author's objective in writing this article is to interest potential
investors in this subject to the point where they are encouraged to conduct
their own further diligent research. Neither the information nor the opinions
expressed should be construed as a solicitation to buy or sell any stock,
currency or commodity. Investors are recommended to obtain the advice of a
qualified investment advisor before entering into any transactions. The
author has neither been paid nor received any other inducement to write this
article.
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