One Fifth - A Report on GOLD

Now that both Peter Schiff and Jim Rickards have officially and recently endorsed $15,000 Gold (see YouTube video at this LINK), its time to look at what longer term and shorter term charts say about this possibility. First, let's look at the long term LOG trend lines in Gold.

Gold - Monthly Close - Long Term LOG Trend Lines

 

As you can see from this chart - which ends in June 2020 - price had not yet hit the upper long term log trend line. This longer term trend line comes in around $2,500 - 3,000, depending on if and/or when price hits it. It doesn't have to hit it in the short run, and I explain that below. But, this price is fully only one-fifth of the Schiff / Rickards prediction, and Schiff is predicting even wildly higher. OK. But, we all know price has, indeed, peaked up over the prior wave III high.

Elliott Wave analysis suggests wave II is a relatively simple zigzag structure. That suggests that wave IV could be a flat wave or, possibly, a triangle. But, we note that the lower trend line has never even been tagged. An expanded flat wave could do that. So could a running triangle, but that could take much more time.

Notice the volume structure of the price chart; see how few people wanted GOLD in 1999, when the FED's intentions for QE were relatively unknown. And now look at how many people want gold now that the actuality of the FED's QE intentions are well known. True the volume has fallen off a bit most recently.

So, if we are in the b wave of a Flat wave for wave IV, how does it count? Degree labeling suggests that the usual wave counts by services and on the internet have it incorrect. Let's look at why.

GOLD Futures - Monthly - Parallel Channel

 

The closer-in monthly charts suggests a parallel trend channel, but depending on which wave you pick for the bottom (2016, 2018 or 2019), the Fibonacci ruler can show over a 2.618 wave. As discussed in the post entitled "Degree Labeling Lesson on Apple", Aug 9th, waves that go over 2.618 are very, very suspicious from a degree labeling standpoint. Since, we know a large Elliott Wave service got their count on Gold completely wrong - a count I wrote and warned them about because of miscounting their downward diagonal - I propose the following degree labeling method and one alternative.

Gold Futures - Monthly - Method1

 

Returning to the original Monthly Parallel, we see that this Method of Labeling solves the degree labeling problem in one manner in that Primary ((W)), ((X)), and ((Y)) can now all be of the same degree label. But, what about that Primary ((X)) wave? Is it really that short in time? Yes, it can be, but that does seem to argue against good form and proportions in waves, doesn't it? And what about that currently wide-open MACD? So, what if we try this in addition or instead?

 

Gold Futures - Monthly - Method2

 

This method still honors the monthly price channel, but it gives the Primary ((X)) wave more time to develop. It might well be five-waves down to wave Intermediate (C) of ((X)), and that would get a lot of bears prematurely looking for the decline to start. A larger ((X)) wave might give the MACD time to cross lower, and to diverge on the next wave up. And the chart has the added bonus of also preserving degree labels, without calling for a nearly impossible series of waves as have been published elsewhere.

So now let's move to weekly.

Gold Futures - Weekly - Local Parallel

 

The key things to note here are the suspiciously short-in-price Minor B wave, the fact that the current down wave is longer than it in price, and that the weekly MACD is still wide-open. Clearly a breach of this downward parallel would bring some new information to the party.

And, now the daily.

Gold Futures - Daily - MACD Cross Lower

 

The daily MACD is the only one to cross lower, so far. From this chart, it's not clear Gold has made five waves down yet. But, it could easily or might have. It could do so as an impulse or as a diagonal, or an impulse which is only part of a diagonal. I do not expect the count downward to a Primary ((X)) wave to be an easy one. So, let's have a last look at the intraday chart.

Gold Futures - 1 Hr - Diagonal and Correction

From this chart, about the only way to see the down move in agreement with degree labeling is as an overlapping expanding diagonal, lower. So maybe the five waves down have indeed been completed. Then there is another channel upward, which will probably tell us a lot if broken lower. As it is, it can be counted as an (x) wave of a double-zigzag. But the other potential is to make a flat wave, with a near equal low to wave minute ((v)) as a ((b)) wave, followed by a five-wave up move to extend the correction in price.

So, keep a close eye on things. There are reasons these very smart men are out now making their extreme predictions. You don't think they want you to buy for some reason, do you?

P.S. This is the second post this weekend. If you have not seen the first one, you may wish to view it as well.

Have an excellent rest of the weekend.

TraderJoe