Gold Analysis 2013

January 3, 2013

There is a high probability that the correction in the gold price that started in early October at $1797 has been completed.

All the minor waves are in place and the A and C wave portions are approximately equal at -$120 each. The chart below depicts the action on COMEX via the 2 month forward chart:

The analysis of wave C is as follows:

a. 1758 to 1687 -71

b. 1687 to 1727 +40

c. 1727 to 1636 -91

C. 1758 to 1636 -122

Wave a. at -$71 is 78% of wave c. at $91, an Elliott relationship.

Even the smaller c wave portion of wave C has 5 small waves which have a neat Elliott configuration, as follows:

Analysis of wave c of C:

i.   1727 to 1681 -46

ii.  1681 to 1706 +25

iii. 1706 to 1664 -42

iv.  1664 to 1680 +26

v.   1680 to 1636 -44

Wave c. 1727 to 1636 -91

Note that the corrective waves ii and iv are +25 and +26, confirming that they are part of the same wave. The downward waves are within $2 of -$44 each. All pretty neat.

The following chart of the PM gold fixings was prepared a couple of weeks ago to indicate the possible target low of $1642 for the end of the correction:Note that $1642 was also the 61.8% retracement level as well as the point where waves A and C would have been equal. That target of $1642 was not achieved, the lowest PM fix being $1650 on Dec 20, 2012. There was a slightly lower morning fix the next day, but there is enough evidence when combined with the Comex gold chart to conclude that the correction from $1797 has been completed.

Obviously a decline to below $1636 would render this analysis valueless and we would have to reconsider the situation. The PM fix on Jan 2, 2013 was $1693, so there is already some upward movement on the scale that one should now expect.

Once $1800 is taken out on the upside, the gold chart will look tremendous. A beautiful "cup and handle" base would then provide strong support for a vigorous upward climb in the precious metal. At this stage there is no reason to abandon the rough target of $4500 for this coming upward wave. Once we have the next upleg above $1800 in place, it will be possible to start refining this target.

It seems that gold is well set up for a spectacular year in 2013.


 

 

Alf Field

3 January 2013

Comments to: alffield7@gmail.com

Disclosure and Disclaimer Statement: The author advises that he is not a disinterested party in that he has personal investments gold and silver bullion, gold and silver mining shares as well as in base metal and uranium mining companies. The author's objective in writing this article is to interest potential investors in this subject to the point where they are encouraged to conduct their own further diligent research. Neither the information nor the opinions expressed should be construed as a solicitation to buy or sell any stock, currency or commodity. Investors are recommended to obtain the advice of a qualified investment advisor before entering into any transactions. The author has neither been paid nor received any other inducement to write this article.

Alf Field was born and raised in South Africa. He is a Chartered Accountant by training. Together with a partner, he started his own funds management business in 1970 in Johannesburg. In August 1971, when the USA stopped converting US dollars for gold at $35, Alf perceived a major opportunity to buy large quantities of gold mining shares personally and for clients. In 1979 he migrated with his wife and four children to Australia. He is currently a self-funded retiree who manages his own portfolio. In 2002 Alf started writing articles on gold related subjects, including monetary history, as well as a series of gold price forecasts using the Elliott Wave technique.

Gold is found in nature in quartz veins