I have long detailed my Elliott Wave analysis that bullion was in an extended wave that would have nine subdivisions. I disagreed entirely with the community that labeled the A-B wave as the 1-2, the first corrective wave. It was still part of the major base and not the start of the main bull market. That is why those analysts were constantly calling for a fall in bullion back to at least $360, and much more in some cases. Bullion did not pull back to $360 because it was only mapping out a minor 5-6 correction not the major correction expected by most analysts.

Where to from here?

The 5-6 correction has completed and we are on our way up to 7 prior to the corrective wave 8 followed by the final bull wave to 9 for major new highs in this long term bull market.

I have detailed below my analysis of the current situation.

Bullion broke decisively above the 15 year resistance at $430. During the past week it has pulled back to test this breakout. This has provided a minor iii-iv correction and another buying level with further upside counts. I am looking for a move to $495 as the next phase to be followed by a minor 3-4 correction prior to completing wave 6 at around the $530 level for point 7. At this point a reasonable correction from 7 to 8 can be anticipated that could last for four or five months. After this correction comes the final upside euphoria surge that should take bullion back to around $630. In my analysis, this will be the time to panic. A move above $600 will signal the end of the major bull run from 2001. It will be selling time.

Until then sit back and relax. Sure we will see some of the usual volatility associated with all precious metals. But I do not see any long term danger until bullion is well over $600.

Imagine what a gold price of this level will do to Durban Deep!!!!!!!!!!!

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Dr. Clive Roffey
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10 December 2004