Best of the Week
Most Popular
1. US Housing Market House Prices Bull Market Trend Current State - Nadeem_Walayat
2.Gold and Silver End of Week Technical, CoT and Fundamental Status - Gary_Tanashian
3.Stock Market Dow Trend Forecast - April Update - Nadeem_Walayat
4.When Will the Stock Market’s Rally Stop? - Troy_Bombardia
5.Russia and China Intend to Drain the West of Its Gold - MoneyMetals
6.BAIDU (BIDU) - Top 10 Artificial Intelligence Stocks Investing To Profit from AI Mega-trend - Nadeem_Walayat
7.Stop Feeding the Chinese Empire - ‘Belt and Road’ Trojan Horse - Richard_Mills
8.Stock Market US China Trade War Panic! Trend Forecast May 2019 Update - Nadeem_Walayat
9.US China Trade Impasse Threatens US Lithium, Rare Earth Imports - Richard_Mills
10.How to Invest in AI Stocks to Profit from the Machine Intelligence Mega-trend - Nadeem_Walayat
Last 7 days
Eye Opening Currency Charts – Why Precious Metals Are Falling - 23rd May 19
Netflix Has 175 Days Left to Pull Off a Miracle… or It’s All Over - 23rd May 19
Capitalism Works, Ravenous Capitalism Doesn’t - 23rd May 19
The Euro Is Bidding Its Time: A Reversal at Hand? - 23rd May 19
Gold Demand Rose 7% in Q1 2019. A Launching Pad Higher for Gold? - 23rd May 19
Global Economic Tensions Translate Into Oil Price Volatility - 22nd May 19
The Coming Pension Crisis Is So Big That It’s a Problem for Everyone - 22nd May 19
Crude Oil, Hot Stocks, and Currencies – Markets III - 22nd May 19
The No.1 Energy Stock for 2019 - 22nd May 19
Brexit Party and Lib-Dems Pull Further Away from Labour and Tories in Latest Opinion Polls - 22nd May 19
The Deep State vs Donald Trump - US vs Them Part 2 - 21st May 19
Deep State & Financial Powers Worry about Alternative Currencies - 21st May 19
Gold’s Exciting Boredom - 21st May 19
Trade War Fears Again, Will Stocks Resume the Downtrend? - 21st May 19
Buffett Mistake Costs Him $4.3 Billion This Year—Here’s What Every Investor Can Learn from It - 21st May 19
Dow Stock Market Trend Forecast 2019 May Update - Video - 20th May 19
A Brief History of Financial Entropy - 20th May 19
Gold, MMT, Fiat Money Inflation In France - 20th May 19
WAR - Us versus Them Narrative - 20th May 19
US - Iran War Safe-haven Reasons to Own Gold - 20th May 19
How long does Google have to reference a website? - 20th May 19
Tory Leadership Contest - Will Michael Gove Stab Boris Johnson in the Back Again? - 19th May 19
Stock Market Counter-trend Rally - 19th May 19
Will Stock Market “Sell in May, Go Away” Lead to a Correction… or a Crash? - 19th May 19
US vs. Global Stocks Sector Rotation – What Next? Part 1 - 19th May 19
BrExit Party EarthQuake Could Win it 150 MP's at Next UK General Election! - 18th May 19
Dow Stock Market Trend Forecast 2019 May Update - 18th May 19
US Economy to Die a Traditional Death… Inflation Is Going to Move Higher - 18th May 19
Trump’s Trade War Is Good for These 3 Dividend Stocks - 18th May 19
GDX Gold Mining Stocks Fundamentals Update - 17th May 19
Stock Markets Rally Hard – Is The Volatility Move Over? - 17th May 19
The Use of Technical Analysis for Forex Traders - 17th May 19
Brexit Party Set to Storm EU Parliament Elections - Seats Forecast - 17th May 19
Is the Trade War a Catalyst for Gold? - 17th May 19
This Is a Recession Indicator No One Is Talking About—and It’s Flashing Red - 17th May 19
War! Good or Bad for Stocks? - 17th May 19
How Many Seats Will Brexit Party Win - EU Parliament Elections Forecast 2019 - 16th May 19
It’s Not Technology but the Fed That Is Taking Away Jobs - 16th May 19
Learn to Protect your Forex Trading Capital - 16th May 19
Gold Ratio Charts Offer The Keys to the Bull Market - 16th May 19
Is Someone Secretly Smashing the Stock Market at Night? - 16th May 19

Market Oracle FREE Newsletter

U.S. House Prices Analysis and Trend Forecast 2019 to 2021

Is It Time To Prepare For The Precious Metals To Get Whacked?

Commodities / Gold & Silver 2019 Jan 11, 2019 - 12:06 PM GMT

By: Avi_Gilburt

Commodities

This article was originally published on Sun Jan 6 for members of ElliottWaveTrader: Over the last several weeks, I have seen those that were absolutely certain back in September and October that gold was going to drop below $1,000 now turn into major bulls in the metals complex. The silver rally especially has gotten the attention of many metal’s traders, and has everyone now all bulled up for a major break out in the complex.

It really is amazing to watch how price extremes dictate the manner in which investor’s views are driven about a market. Yet, as Roy Prassad, one of our more astute members at Elliottwavetrader.net, noted: “the goal of Elliott Wave is to analyze sentiment, not participate in it.”


So, just as we were looking for bottoming back in September when most were extremely bearish and calling for the certain drop in gold below $1,000, I am now looking for topping in the coming weeks. And, GDX is my clearest guide.

If one zooms out on the daily chart, you will clearly see that the rally off the September low into the October high was 3 waves up, followed by a corrective 3-wave pullback. After that 3-wave pullback completed, we then proceeded to rally up in 5 waves, for which we seem to now be approaching completion. To me, this is a classic a-b-c corrective rally. Moreover, this a-b-c rally has taken us right into our resistance target between 21.50-22.30.

As I said earlier, this is the clearest guide I have in the complex, and the main reason I am still looking for one more bout of weakness in the coming months which can point us down to the 16-17 region for a 5th wave in this c-wave down. Should we break out through the 22.30 region, I would have to reconsider my perspective, and view the potential of a leading diagonal off the recent lows. But, as long as we remain within our resistance region, it provides us with a well-defined zone in which we can maintain a strong short-term bearish bias.

As far as silver is concerned, I have been patiently waiting for it to move into its accelerated trend channel for a 3rd wave off the lows, and for weeks, it had been disappointing me. But, we have finally seen that move I had wanted to see, and it even went a bit further than my initial expectations. However, now I think we have just about completed its 3rd wave off the lows, and, as you can see, I have adopted the primary count that the next pullback will be a 4th wave, to be followed by a 5th wave in the coming month or two to complete 5 waves up off the recent lows.

As you may remember, I kept noting that silver really had a very full pattern to the downside when we were looking for that bottom back in November, but I needed to see a solid 5 wave structure develop off those lows to really solidify a bottom in the chart. Thus far, this best counts as 3 waves up.

So, I am sure many of you are asking yourselves how I can expect a big decline to begin shortly in GDX but still see silver provide us with a 4-5 to complete 5 waves up off the lows? For those that have experience in the metals market, you would know that different charts top at different times. For example, if you look back to 2011, silver topped well before gold topped, and when gold entered its final rally, silver only saw a b-wave rally in its larger degree correction. In our current case, I can easily see silver pullback in a 4th wave while GDX drops in an a-wave of its final 5th wave lower. (Remember that we are tracking this c-wave in the GDX as an ending diagonal, which means that the 5th wave lower will be an a-b-c structure). That would then give us a 5th wave rally in silver while GDX only sees a b-wave rally in its final 5th wave decline.

As far as GLD is concerned, I have to admit that this rally is much higher than I would have expected for a 4thwave rally. But, amazingly, it still counts best as a 4th wave rally, similar to GDX. But, I think it is much less clear in GLD as it can just as easily be a leading diagonal for wave (i) off the lows. So, based upon the overall of wave 4 into wave 1 territory, I am not as confident as I was a few months ago that this is a 4th wave rally. In either case, I would still expect a deep retrace for a wave (ii), with the potential still remaining of a drop to the 105-109 region for a 5th wave lower. But, as I noted, I am not as confident in this perspective at this time.

When we look at the correction since we topped back in August of 2016, it has now taken us two and a half years, and I still think we see one more bout of weakness before this wave ii is done. That is truly an amazing structure to consider. This market has done everything it possibly can to shake investors out of the bullish feelings they maintained back in the summer of 2016 into a sense of indifference to even utter despondency. And, I believe a drop to the 16-17 region will cause the rest of them to throw in the towel, assuming that they are still holding one.

But, I will be viewing that drop as a buying opportunity almost akin to the one we highlighted back in the last quarter of 2015. So, I would suggest you make your plans now, because I will guarantee that the bearish sentiment which will grip the market when GDX is in the 16-17 region will strike too much fear in the average investor to be able to pull that trigger on the long side when the time comes. This is what sets the successful investor apart from the average investor.

As Ben Franklin wisely noted:

“By failing to prepare, you are preparing to fail.”

See charts illustrating the wave counts on GLD, GDX, YI & NEM.

Avi Gilburt is a widely followed Elliott Wave technical analyst and author of ElliottWaveTrader.net (www.elliottwavetrader.net), a live Trading Room featuring his intraday market analysis (including emini S&P 500, metals, oil, USD & VXX), interactive member-analyst forum, and detailed library of Elliott Wave education.

© 2019 Copyright Avi Gilburt - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules