Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
AI Stocks Portfolio and Tesla - 23rd May 24
All That Glitters Isn't Gold: Silver Has Outperformed Gold During This Gold Bull Run - 23rd May 24
Gold and Silver Expose Stock Market’s Phony Gains - 23rd May 24
S&P 500 Cyclical Relative Performance: Stocks Nearing Fully Valued - 23rd May 24
Nvidia NVDA Stock Earnings Rumble After Hours - 22nd May 24
Stock Market Trend Forecasts for 2024 and 2025 - 21st May 24
Silver Price Forecast: Trumpeting the Jubilee | Sovereign Debt Defaults - 21st May 24
Bitcoin Bull Market Bubble MANIA Rug Pulls 2024! - 19th May 24
Important Economic And Geopolitical Questions And Their Answers! - 19th May 24
Pakistan UN Ambassador Grows Some Balls Accuses Israel of Being Like Nazi Germany - 19th May 24
Could We See $27,000 Gold? - 19th May 24
Gold Mining Stocks Fundamentals - 19th May 24
The Gold and Silver Ship Will Set Sail! - 19th May 24
Micro Strategy Bubble Mania - 10th May 24
Biden's Bureau of Labor Statistics is Cooking Jobs Reports - 10th May 24
Bitcoin Price Swings Analysis - 9th May 24
Could Chinese Gold Be the Straw That Breaks the Dollar's Back? - 9th May 24
The Federal Reserve Is Broke! - 9th May 24
The Elliott Wave Crash Course - 9th May 24
Psychologically Prepared for Bitcoin Bull Market Bubble MANIA Rug Pull Corrections 2024 - 8th May 24
Why You Should Pay Attention to This Time-Tested Stock Market Indicator Now - 8th May 24
Copper: The India Factor - 8th May 24
Gold 2008 and 2022 All Over Again? Stocks, USDX - 8th May 24
Holocaust Survivor States Israel is Like Nazi Germany, The Fourth Reich - 8th May 24
Fourth Reich Invades Rafah Concentration Camp To Kill Palestinian Children - 8th May 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Precious Metals Meandering Continues – So Please Maintain Patience

Companies / Gold & Silver 2019 Dec 28, 2019 - 06:49 PM GMT

By: Avi_Gilburt


When the metals are in a bear market, metals enthusiasts are frustrated. And, even when the metals are in a bull market, metals enthusiast become frustrated. This is what I have been seeing of late, as the metals are consolidating for their next bullish run.

But, if you trade metals, you know that they actually spend much of their time consolidating. The reason is that their moves are so strong and powerful, they complete quite quickly, while spending the great majority of their time within a consolidation. And, that is what I think we are seeing now.

Yet, I don’t think we will see the bigger fireworks until 2020, and it may not even be until the 2nd quarter of 2020.

You see, before we are even able to confirm a major break out and the potential of a major third wave taking hold, we still need to see another 5-wave rally complete. And, neither of the metals have broken out to suggest even that the initial 5-wave rally is taking shape. While many of the mining stocks we track have clearly begun that rally, such as the NEM, silver and GLD have still not strongly convinced market participants that their rallies have begun. But, I think that is simply a matter of time.

Therefore, we still need to see this smaller degree 5-wave rally completed before we are able to set up the major 1st and 2nd wave for the rally I expect to see in 2020.

So, while the metals take their time before breaking out, I want to take a moment to address a question I get all the time, and that is the “bearish” perspective many derive from the “Commitment of Traders” report. The common argument suggests that as long as the commercial traders are shorting gold heavily, then gold cannot rally. Yet, history suggests otherwise.

If you look at the attached chart for the last 20 years, you will see that during the parabolic rally of 2010-2011 in gold, the commercial traders were heavily short gold. In fact, you can see that during that entire period of time, commercial shorts remained at 200,000 or greater. Yet, that was during a period of time where gold rallied $800. For those counting in percentage terms, that means gold rallied 70%+ during a time where commercial traders were heavily short of gold.

You see, just like technicals have to be read differently during bull markets versus bear markets, so does the COT. During bear markets, when the technicals reach an overbought level, then it often suggests the market will likely begin a selling phase. However, in a bull market, when the technicals reach an overbought level, rather than suggesting selling will result, the technicals often embed during the strong advance of a bull market. The same will often happen with the COT. So, applying a linear expectation to the COT data will not often result in the appropriate trading result.

In the near term, GLD must break out strongly through the 139.70 resistance region, and silver now must break out through the 17.60 region. A break out in GLD should be pointing it up towards the 143-45 region for wave 1 of v of [3], whereas a break out in silver will likely point us to a minimum target of 18.50 for wave [1] of wave [iii]. But, as you can see, we will then need one more consolidation in a 2nd wave before the fireworks really begin in 2020. This suggests that the middle of 2020 will likely present us with a potentially powerful rally in the metals market should this set up trigger.

In GDX, we still need to take out the micro pivot noted on the 8-minute chart to suggest we have begun the rally for wave [i] of iii of [3] of 3, which is targeting the 30 region before it sees its wave [ii] pullback.

Lastly, and most interestingly, the GDXJ may still be within its wave [iv] of wave i, as shown in the attached chart. I don’t think the alternative count has a high probability at this time since this pullback seems to be corrective in nature. But, a break down below 37.25 would suggest otherwise. In fact, at this point in time, if the market has begun its next major rally phase based upon the primary count, I would not expect to break below 37.25 at any point in time, even in the wave ii. But, admittedly, this is not the cleanest or most reliable count, as I don’t trust diagonals.

For now, it seems we still will need to have a bit more patience, even if the markets do break out to complete their respective 5-wave structures off the recently lows. We will still likely need another multi-week (and maybe as long as multi-month) 2nd wave pullback before the fireworks for 2020 are seen. That is the set up for which I am being patient when it comes to trading this market with leverage. Until then, I have no reason to turn overly aggressive. And, most importantly, until then, I suggest we all maintain a modicum of patience.

See chart on GDX illustrating Avi's wave counts.

Avi Gilburt is a widely followed Elliott Wave analyst and founder of, a live trading room featuring his analysis on the S&P 500, precious metals, oil & USD, plus a team of analysts covering a range of other markets. He recently founded, a live forum featuring some of the top fundamental analysts online today to showcase research and elevate discussion for traders & investors interested in fundamental rather than technical analysis.

© 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.

© 2005-2022 - 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