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THE ELLIOTT WAVE PRINCIPLE
THE FIVE WAVE PATTERN
"In markets, progress ultimately takes the form of five waves of a specific structure. Three of these waves, which are labeled 1, 3 and 5, actually effect the directional movement. They are separated by two countertrend interruptions, which are labeled 2 and 4, as shown in Figure 1. The two interruptions are apparently a requisite for overall directional movement to occur."
"At any time, the market may be identified as being somewhere in the basic five wave pattern at the largest degree of trend. Because the five wave pattern is the overriding form of market progress, all other patterns are subsumed by it."
.. E. W. P.
After five obvious, clearly visible waves, the Super Cycle Bubble has burst.
The Fibonacci Series of Numbers
0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233
July 4, 1776 the Declaration of Independence was signed.
The United States of America Was Born.
1776 plus 233 equals 2009.
"The situation in which I now stand for the last time, in the midst of the representatives of the people of the United States, naturally recalls the period when the administration of the present form of government commenced, and I can not omit the occasion to congratulate you and my country on the success of the experiment, nor to repeat my fervent supplications to the Supreme Ruler of the Universe and Sovereign Arbiter of Nations that His providential care may still be extended to the United States, that the virtue and happiness of the people may be preserved, and that the Government which they have instituted for the protection of their liberties may be perpetual."
..Washington's final annual message to congress - December 7, 1796
Dear subscribers, please do not wait; do not hesitate; if you do not own gold in physical form, buy now. In a shooting war we need guns. In a financial war we need gold.
NOW IS THE HOUR. THERE IS PRECIOUS LITTLE TIME LEFT BEFORE THE WORLD WAKES UP TO THE EXTENT OF THE COLLAPSE. I CAN NOT PREDICT EXACTLY HOW THIS DISASTER WILL END BUT I KNOW WHAT HAS SURVIVED EVERY FINANCIAL DEBACLE IN HISTORY. IT IS NOT POLITICIANS WORDS OR MONETARY MANIPULATIONS. IT IS GOLD AND GOLD ALONE.
As I have in the past I will in the present and the future attempt to lead all of us through the forest of financial failure. That means I will be following the rising path of gold and the falling path of the stock market using every last bit of knowledge I have acquired fighting these wars for fifty two years. For some time I have been writing that the day will arrive when "the big switch" must be made in order to complete our financial survival. This will involve the sale of gold and the purchase of totally devastated major industrial shares. The reason for the "big switch" is because they will have fully and completely discounted every known and unknown financial disaster. At the right time they will be the safest item to own.
"Time is more important than price; when time is up price will reverse."
W.D.Gann
EXCERPTS FROM THE SEPTEMBER 19, 2008 REPORT
A commodity expert says, "The move up in gold is unreal, unbelievable, and unexpected." For someone who for a number of years has been writing about the third of a third wave in the HUI and the fact that commodities, including gold, have their biggest move, including extensions, in their fifth and final wave, I say that statement is nonsense. These moves are not only believable; they have not even really started. Their big moves will begin after they make new highs and have a correction. Then they will really begin to fly and make up for lost time.
When the precious metals begin to fly the stock indices will begin their truly severe collapse. We must keep in mind that at some point in the future it will be necessary to shift a substantial portion of our precious metal holdings into severely collapsed major industrial, utility, and transport shares. It will be emotionally difficult to do this at the appropriate time but necessary in order to avoid any potentially drastic government action against those who were wise enough to maintain precious metal holdings when few investors wanted them.
Your courage and steadfastness in holding and not selling your precious metal investments in spite of all the attempts to dislodge them from your portfolio is not only commendable but extremely courageous. Your courage and foresight is in the process of being more than handsomely rewarded. Your courage in holding your precious metal investments through thick and thin will not only be rewarded by seeing them dramatically increase in value but also be rewarded by putting you in a position to make "The switch" when all around you are hysterical, massively depressed, and convinced that the end of the United States of America and the world as we knew it is finally here. Those who believe that will once again be making a major miscalculation, a miscalculation as big as their belief that gold was an "Ancient Relic."
The United States of America will not perish. We will reestablish the rules and regulations in our financial sectors that allowed us to become a most prosperous nation once again. First comes the undoing of the preposterous speculative over leveraging of Wall Street and the investment community. That is a most painful process that has just begun. Eventually, if political history is our guide, there will be many Congressional investigations looking to place blame. There is an old Wall Street adage that goes like this:
"In a bull market the crooks make money. In a bear market the crooks go to jail." Again, if history is our guide, and it should be, the stock indices will be rising through out all of the investigations and finger pointing. The investigations and trials of the "culprits" will be in the nightly news for a very long time. Books will be written explaining what happened. In other words;
"There is nothing new under the sun." Ecclesiastes 1:9
Gold bullion is only $43.50 from a new all time high. The MACD monthly indicator, today, February 17, moved above the - 0 - line and that is bullish.
GOLD MONTHLY
GOLD QUARTERLY
HUI MONTHLY
SILVER MONTHLY
S&P500 QUARTERLY
CRUDE OIL QUARTERLY
SUMMARY
The bear market in the stock indexes and the financial turmoil the world is experiencing is being called a secular bear market. One of the definitions of secular found in Webster's Ninth New Collegiate Dictionary that aptly describes the bull market that ended in the year 2000 is: "Existing or continuing through ages or centuries." A secular bull market is corrected by a secular bear market.
The bull market that is being corrected appears to be five waves and two hundred years long. It began approximately in the year 1800 and topped in the year 2000.
Therefore, we are experiencing a secular bear market. In a completed five wave bull market the bear market that follows most often returns to and bottoms between the third and fourth wave of the preceding bull market. In the Dow Jones Industrial Average wave three topped at 386 in October 1929. Wave four bottomed at 41.22 in June 1932. A bottom for this bear market between 386 and 41 in the Dow Jones Industrial average may be incomprehensible to many market observers. What should be comprehensible is forget about gold corrections and as the saying goes, "Hang on to your gold for dear life." The entire 200 year growth period of the United States of America may be in the process of eliminating all accumulated excesses, like it or not. I suggest we all ignore our politicians' ignorant blathering and I repeat, "Hang on to your gold for dear life."
Stay well,
Ron Rosen
Disclaimer: The contents of this letter represent the opinions of Ronald L. Rosen. Nothing contained herein is intended as investment advice or recommendations for specific investment decisions, and you should not rely on it as such. Ronald L. Rosen is not a registered investment advisor. Information and analysis above are derived from sources and using methods believed to be reliable, but Ronald L. Rosen cannot accept responsibility for any trading losses you may incur as a result of your reliance on this analysis and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities. Do your own due diligence regarding personal investment decisions.
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