Gold Market Update
Captain's log, trade date 10.07.10 The dawn of the 21st Century continues to produce financial shock waves resulting from a generational abuse of credit, fiat currency systems, and exotic financial derivatives.
Conceived from a flawed premise of faith-based paper currencies and easy credit, solutions for intractable monetary and fiscal disorders appear limited to the imposition of exponentially more of the same failed remedies that spawned the massive dislocations in the first place.
The future outcome shall likely conclude that the so-called tools that central banks, powerful elites, and political legislators employed to impose their monopoly-brand of command-and-control mandates to guide economies, are the very tools that led to their collapse and insolvency.
Charting the price of Gold is one of the best ways to measure the ill effects of such incessant endeavors. Placing 10-20% of one's net worth in physical possession of precious metals is an effective solution to insure against the ongoing and future fallout from the systemic failure that occurred 2008.
This 10-minute video-article takes visual look back at where gold has traded since 2005, and where it may be heading in the next few years.
Step into the past:
In November 2005, Elliott Wave Technology launched its charting and forecasting service as Gold was full swing into its fifth year of advancing in a robust bull market. At the time, Gold was trading in the 500-dollar range - up over 100% after registering a 20-year bear market low in 1999. We were long-term bullish then, and we remain so now.
We produced the three charts that follow from an archived back issue of our Near Term Outlook published on October 29, 2008. In direct contrast to some of the most notable mainstream Elliott wave authorities, we saw the October 681 low as an incredible buying opportunity vs. the onset of a total deflationary collapse in the Gold price.
Since then, the price of Gold has doubled, yet no one has invited us for an interview on CNBC. That is fine by us, in fact, we like things just the way they are; no fanfare, no beating the drum on dead wave counts, just getting the job done right is all that concerns us.
That said, let us now go back, and review where we stood two years ago.
October 28, 2008 long-term monthly bar chart
Long-Term Elliott Wave Analysis 10-23-2008
In our last comments on June 10, we stated- "There is good argument that the recent breach of $1000, and print high of 1030, marks the terminal to Primary "3". We are now compelled to give preference to this count as reflected in the charts above.
Chart highlights: Upon the breakout above the 730.40 level in September 2007, we cited an upside price target of 1200. Upon the cross above the 875 level in November 2007, we cited a 1495 upside price target.
October 28, 2008 weekly bars
Chart highlights: Following its first print high north of 1000 at the primary 3-wave designation, note the captured downside sell-trigger target of 685 (circled in blue), which booked profits 4-points from the 681 primary degree 4-wave bottom.
October 28, 2008 daily bars
Near-Term Outlook for GOLD 10-28-2008:
- Potential clarity amid prospects of a Primary 4 wave down in process of basing-
We now view Gold as basing in a primary fourth wave decline. There exists a general 9-year cycling of lows in the Gold market. The last major low was set in 1999, and as such, 2008 provides a period to anticipate another cyclical low point from which Gold may put in another long-term base. The balance of trajectories, targets, point-values, wave-labels, and alternates remain as noted.
Chart highlights: Note the level of detailed accuracy in which we tracked the a-b-c-d-e minor degree expanding wedge and its minute degree subdivisions amid the eight-month decline into the base of the primary 4-wave down.
All told, there is no question that our guidance, forecasting, and interpretations from two years ago were spot on the money.
Back to the future:
Below, we have drafted our latest and most bullish long-term forecast for Gold. Thus far, it maintains adherence to our standing interpretations set forth some five years ago. If the self-anointed masters of our financial universe continue tinkering with their QE toolkits, and policy makers continue to exhibit spineless leadership, do not be surprised if Gold strikes 2400 within the next few years.
Truthfully, we do not wish to see gold trading at 2400 no matter how much physical we may own. Such an outcome would suggest a Zimbabwe-style hyperinflation has taken root. Such an occurrence would likely engender an elongated period of widespread civil unrest.
Until next time,
Trade Better/Invest Smarter
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