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Elliott
Wave Gold Update XV
In Gold market
we finally have "Ignition" and "Lift-off". Events over
the past three weeks have created a situation where an upside price catapult
of at least $100 per ounce, without a significant correction, can be
anticipated.
It appears that
the long 14 month correction since May 2006 has come to an end and the much
anticipated strong "third of a third" up wave has started. This
forecast can now be given a high probability of success.
Data updated to
9 July 2007.
There are a
couple of reasons for this confidence. Firstly the two downward waves in the
most recent correction have turned out to be identical in terms of percentage
decline, literally to the decimal point. This strongly suggests that these
two declines are part of the same larger correction, which is what had been
anticipated in Update XIV. Secondly the recent downtrend was decisively
broken yesterday, 9 July 2007, indicating that the correction is over.
The following
are the details of the 2 down-waves in the smaller irregular a-b-c correction
reflected in the above chart of the London PM fixings:
Wave a of wave C of wave 2: $685.7 to $636.7 - $49.0 -7.1%
Wave c of wave C of wave 2: $691.4 to $642.1 - $49.3 -7.1%
This is uncanny
and very exciting when combined with the strange shape of the complete wave 2
correction. Wave 2 is an extremely rare Irregular A-B-C correction with a
skewed upward bias. As explained in an earlier newsletter, this formation
occurs because of the very strong bullish forces underlying the market which
cause the upward bias. When the corrective forces eventually abate, the
underlying strength catapults the market upwards in a rarely witnessed rapid
upward move that exceeds almost everyone's expectations. That is what is
anticipated in the forthcoming weeks as the strong wave 3 of wave THREE
unfolds.
Initial evidence
that the gold rocket has cleared the gantry will be when a PM fixing above
the recent high point
of $691.4 is achieved. Assuming that the gold market is now in the grip of
the strong "third of third" wave, it should have no difficulty
powering through the erstwhile resistance in the $680 to $700 range.
The 2 Month
Forward Comex Gold chart depicts a similar
situation:
Data updated to
9 July 2007.
This chart shows
the dramatic breakaway gap above the red down trend line, implying that the
correction is over and that the new upward wave 3 has commenced. The
percentage declines in the a and c down-waves within wave C of wave 2 are
also almost exactly equal, as reflected in these figures:
Wave a of wave C of wave 2: $693.4 to $639.9 - $53.5 - 7.7%
Wave c of wave C of wave 2: $697.4 to $642.7 - $54.7 - 7.8%
While not
precisely equal as in the PM fixings, a single decimal point difference does
not detract from the observation that these two down waves are of equal
magnitude and thus part of the same corrective wave. This confirms the
conclusion drawn from the PM fixings.
The same bullish
conclusions mentioned as a result of the PM fixings analysis can be drawn for
the Comex 2 Month Forward Gold chart. It appears
that wave 3 of wave THREE has commenced and it should be a whopper. Perhaps,
more precisely, the wave underway is wave i of wave
3 of wave THREE.
While the
immediate bullish forecast can now be assigned a high probability of being
proved correct, it is necessary to have some guidelines in case things
unexpectedly go pear shaped and don't work out as forecast.
There are two
levels that would be of concern if breached on the downside.
Firstly the
recent lows at $642.1 for London PM fixings and $642.7 for Comex Gold 2 month forward prices should not be breached
on the downside. Prices below these levels would destroy the symmetry of the
two down-waves being exactly equal and would cause a cautionary light to
start flashing.
Secondly, a
breach of $630 on the downside would indicate that more corrective action is
possible. In that case a new wave count and forecast will have to be
considered.
Alf Field
Disclosure and Disclaimer
Statement: The author 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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