Wednesday, Feb 13, 2008
Gold correcting
Market Oracle: Gold Price Out of Synch With US Dollar Index, Expect Sharp Decline
I am not sure where gold will correct to (maybe 800-850) but this correction is necessary for the final surge up in Elliott wave 5.
This kind of gold blow-off last happened in May 2006.
Posted by sold 2 rent 1 @ 12:19 PM (844 views) Add Comment
28 Comments
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1. happyrenterz said...
Time will tell... There are a lot of assumptions in that graph of relatively short time frame. Like:
-The $ is still viewed as the major world currency.
-That inflation is under control.
-That banking and financial systems will be able to operated as they have in future once this credit crunch is over.
-That the same amount of fear is around now as in the past few years. Notice that gold plummeted yesterday on the euphoria that muni bonds might not collapse. Well this debt crisis is a long way from over in my view.
In my view gold will decline only when other commodities like wheat, soya etc do the same.
2. cornishman said...
My, limited, understanding of the article is that the graph shows that the dollar has not fallen relative to other world currencies since late Nov last year, but gold has appreciated. Therefore a correction is due, to bring the blue and red line back together.
However, this does not take account of the phenomenal amount of money that the Fed, ECB and BoE have been printing in the last couple of months. The dollar has stayed level with other major world currencies because they are all in a race to devalue. The dollar hasn't stayed level with a lot of other Asian and S American currencies - it has depreciated.
I'm not convinced that a major gold sell off is likely. Mind you, I'm not convinced that it's not either!
3. techieman said...
depends what is meant by a decline. From the 937.5 high we have already have a decline - 900 as I blog. I think S2R1 is right, as is the article - bide some time before re-entering longs (if thats what you want to do), but HR is also right - time will tell:
1, the extent of the decline
2, Whether or not we have had an intermediate (s2r1s view) or long term top.
3, Price action is the only determinant that matters.
4. cornishman said...
Just as a point of interest, what happens after this 'final' surge up to Elliot wave 5? Does Elliot start all over again, or does it go to wave 6 and 7 and 8?
5. techieman said...
Cornish - no After Elliott 5th of the 5th of the 5th of the ....well you get the idea, you get 3 corrective waves. so its IMPULSE 1up corrective 2 down, 3 up, 4down, 5up. [bottom of the 2nd higher than the bottom of the 1st - etc.]Then its IMPULSE down - Wave A, Wave B (retraces wave A), Wave C. You may get an extension in the impulse waves - for example after what you may think is the 5th then you get a retracement (which you might think is A) but then it makes a new high (which means that the 5th high may have just been wave 1, with the retracement being wave 2). Pictures work better!!! S2r1 - show Cornish that mystical link thing. or cornish wiki it.
6. doom&gloom said...
I bought into gold and plat mid-jan 2008. gold has gone nowhere but platinum has soared. what's happening now sits well with the 'gold-price-control consipracy theorists' & elliot wave theorists. Only went with platinum for some diversification but it's done me well this year. may liquidate gold and go all-in platinum (thus abandoning my precious metals diversification strategy!)
7. jack c said...
@techieman - bit off topic here but what is your view on where the major stock markets are headed in the next few months or so?
8. Landedgentry said...
Cornishman, wave 5 is the final wave in that direction, price then corrects by wave A, B and C (not 1,2,3,)
A is a fall from the peak, Under wave B price then heads back up as some buyers re-enter the maket and push price back up (but not above the high of wave 5) and then price resumes it's fall again in the final wave (wave C) which falls below the low of wave A. Hope that makes sense.
I personally don't use elliot wave (not that I'm dissing Prechter or elliot followers) I'm more of a trend guy and moving averages mixed with Ehlers Laguerre.
9. Sold 2 Rent 1 said...
Elliott wave example
10. Holding Out said...
For what its worth I think both property and FTSE are overvalued - Im out of both. In Gold but unsure about which way its going (still bullish long term).
11. sold 2 rent 1 said...
Elliott wave example
12. Sold 2 Rent 1 said...
13. techieman said...
jack - next few months!! - am lucky if i get the next few minutes right!! ;-). Basically the whole move down from the top has been the A wave. We are now in a B wave rally, with the C wave down to come. The B wave will probably be complex but i'd loook for around 6200 as the top of that (its 61.8% of the move down from the top added to the low). But having said all that dont put your life savings on it and i would be the first to change this view if the market action suggested otherwise. There are alternative counts but basically i think we are in a bear market rally. Now if you had asked me where i think its going in the next few days........
14. sold 2 rent 1 said...
15. techieman said...
Sorry Jack that was FTSE 100 - now if we are talking DAX/ CAC / DJIA / S&Ps / SMI etc. then I'd have to charge!!
16. jack c said...
@techieman - thanks for the reply much appreciated - now I'm asking where u think its going in the next few days........?
17. happyrenterz said...
@ doom&gloom I am not sure if platinum is really a safe haven for financial collapse. Platinum is mainly valued for being an industrial metal I think. Rare and very useful makes it very valuable. Whereas as gold is pretty much useless apart from being money.
18. techieman said...
Nice charts s2r1!! Thanks for that. Cornish does that help? Probably not right:-). It takes time and you never master it, but when you identify the 3rd and get on it and get out near the 4th, its actually quite (some would say) sadly addictive. Also you can make some great calls and look like a master but the next week you'll make a wrong call and look like an idiot!!!
You can play for small amounts - works well on commodities and generally the UP moves are easier to trade than the down moves. (watch out for those limit moves though). Believe me its very difficult to trade using any "system" (not that i would call Elliott a system as such, in fact you really just aquire an Elliott touch, and those irregular tops are a nightmare!!
19. techieman said...
Well Jack i am long at just shy of 5700, and i got out of half yesterday on the "Buffet" move, which as i think someone said didnt look that great but i think its more a sentiment thing - people can see it on the radar. So Im long and not liquidated, so my money is where my mouth is (to be fair the way things are its not ALOT of money). Not sure that helps you? BTW just looked and we are back near yesterday's highs - I think we follow those americans up - will prob get out around 6000 if it gets there this week! Am not gonna say where my trailing stop is. (it ALKWAYS gets hit when i do that!!).
20. happyrenterz said...
@techieman I also went long with the crash a few weeks ago and getting close to selling now. What happens after wave B? Does Elliot describe further Bear rally waves further down?
21. sold 2 rent 1 said...
Here is a great article about gold - comparing the current run to the 1970s.
http://www.zealllc.com/2006/rgold2.htm
In summary a gold bull has 3 stages (corresponding to Elliott wave 1, 3, and 5)
We are now in Stage 2.
As you might have guessed each stage has 3 major uplegs.
We are currently in upeg 2
In upleg 2, we are now Elliott wave 4 before the final blow-off phase
Upleg 2 should top out this spring summer between 1000-1300
Rough predcitons for the future
Stage 2, upleg 3 should complete in either spring 2009 or spring 2010. Why? Spring is the most likely time historically, and 2010 is more likely as the stage 2 uplegs seem to be 2 years apart (2006, 2008, 2010??)
Stage 3 will start once the a-b-c correction of stage 2 has completed. A very wild rough guess is $2000 down to $1400.
A rough guess of when stage 3 will start is in early 2011
I would imagine we will be in either hyperinflation mode or deflationary depression by then
PS. Techieman sees this current wave as no.5 in the whole bull run.
His count started back in 1999 whereas my count didn't start until the 2001 low in gold.
22. Collywolly said...
Doom&gloom,
Where do you buy platinum from? I thought that was less likely to be priced out by speculators . I Know about www.bullionvault.com for gold but I wondered if there is anything similar for other precious metals.
23. techieman said...
@ hr - well done - takes some b*lls to buy in these scary circumstances!!! I thought i was quote conservative waiting for the move down to dissapate, a retracement and then another downside move before getting in to the upside).
Yes the C wave can itself be a 5 like the charts that s2r1 has shown above, but in reverse - i.e. 5 waves of a C wave. Infact at the moment my view (and this is really too early to put this forward) is that all of this move with the C wave will itself form (A) down of one degree higher, although this C wave of the current move down i.e. after my current B should take out the lows before. But this wont take 5 mins. Incidentially if you looked at a chart of teh 29 - 32 period you will see lots of counter trend moves. Things dont normally go straight down or straight up do they - oh except for property which of course ALWAYS goes straight up!! But then we all KNOW that anyway!!
24. jack c said...
@techieman - thanks for the input much appreciated - I'm hanging in until we bounce back to 63/6400
25. techieman said...
S2r1's comment about my gold view is correct, although i am having difficulty deciding if Gold's done enough to have a long term or intermediate top.
But his differing view (which i respect) to mine does go to show that two people can use Elliott and yet disagree on the count, without it neccesarily meaing that one analyst is better or more right than the other. Its not the holy grail, but it gives a good framework.
26. sold 2 rent 1 said...
techieman,
The trick is to combine various sources of knowledge and techniques.
My forecasts tie in with the cycles' theories of Martin Armstrong, Carl Calleman, Kondratieff, and Oswald Spengler.
2 key factors are:
1. The debt bubble is still growing
2. The gold mania has yet to go full-on mainstream
27. techieman said...
s2r1 - yes you are right i use Williams percent R and RSI for my short term trades and look at the hourlies when things are really moving (i dont use MA much and if i did they would be shorter term than yours - although i do also use cycles in commodities Gold has those too (silly me they dont exist according to some of the peeps that visit here!). You are more long term and use the wave to support your view on fundementals, same thing really just two different time frames. If gold makes new highs i will be the first to modify my count and prob take into account your views.
28. cornishman said...
Guys, thanks for taking the time to input all the info. I've just come back from a very liquid lunch and so will save it all till later! It will make more sense then, I'm sure... well, I hope it will!