Gold & Elliott Wave in Review

I always try to keep things simple. Any highly educated dummy can use big words and double speak, like Allan Greenspan (who was the master at it), but when you walked away you wondered what it was that he actually said. Then the experts would argue about what he said or really meant. However, those of you who have been following me for many years now know that I never do that, I never talk down to anyone and I always try to make things as CLEAR and understandable as possible. Also, I never try to hedge my bets so that no matter what happens I can, like most others, claim that I was right all along and I am not about to change now.

Understanding Elliott Wave enough so that you can utilize it as well as figure out all there is to know about GOLD can be a very complicated task, but I will try and keep them both as simple as I can. Are you ready?

Let's start with a 10 year chart of Gold. Just sit back, hold up the chart at arms length and take a good long look. The first thing that you notice is a nice slow and steady upward sloping curve. That steady rise has been interrupted by only 3 relatively small divergences from the main trend; nothing for long term believers and holders of GOLD to ever get nervous about (but for some strange reason a lot of you have). Despite a great many self-proclaimed Gold Experts continuously recommending that profits be taken every 2 or 3 months along the way, I stood fast in my recommendations NOT to sell out of your position. Instead, I advised to accumulate more should we be fortunate enough to get natural corrections along the way for what will be a minimum 16 year Bull Market. In the process, you will turn all you profits into LONG TERM capital gains.

Thus far, each time I thought that Gold was about to pause in what was a normal and needed strengthening resting point, I recommended selling some at the money options against your long positions and use that money to buy Juniors after the options expire worthless. I advised NOT TO SELL your long term holdings.

Looking at the chart and with the benefit of hindsight, let us suppose that you were able to pick the 3 market peaks and sold out. How many of you would have been able to get back in at the bottom and been able to re-establish the same or even larger positions? The only truthful answer is none and I am willing to wager that anyone who had tried trading is now worse off than if he had just held on as I have been very boringly advising you to do.

So plain and simple, stay with the program, sleep well in confidence that you are doing the right thing and know that the only money that you are wasting is the cost of your subscription to other than UNCOMMON COMMON SENSE.

CYCLES

Let's begin with the Grand Super Cycle that could last as much as 250 years, then on to its half Cycle that lasts 125 years followed in turn by its half 60 year "Kondratieff" cycle and on down to the more commonly known 10 year and 4 year Election Wave cycles …. all the way on down to hourly and 5 minute wave cycles.

Each up cycle (Wave) is made out of 5 waves of 3 up (#s 1,3,5) and 2 waves down (#s 2, 4). In turn, each Up wave is also broken down into the same 5 wave pattern while the Down waves are broken down into A,B,C, with A and C broken down into the same 5 wave pattern and so on and so forth.

There are specific rules involving the relationships between waves that, when all combined, offers the only PREDICTIVE non TREND FOLLOWING system for trading. The book explains the rules and much more in great detail giving many examples along the way. Do you have to study the book? No, you can just keep your subscription and not listen to any other Elliott Wave interpreters. So for the time being, let's see if I can explain what Elliott Wave is telling us today.

ELLIOTT WAVE AND GOLD

This is only the second time I have presented charts to you since UNCOMMON COMMON SENSE is not a charting service nor is it a short term trading system. However, since you are all getting bombarded by self proclaimed experts on Elliott Wave, I thought it might help for you to have a proper Elliott Wave interpretation of where we are, where we came from and most importantly, show you my calculations of where we are likely to go. I will demonstrate to you that picking an 2009 end of this year target of $1250 eighteen months ago or predicting $6,250 as a possible target by 2017 to 2021 was neither pie in the sky or pure guess work. If you are ready, then let's get started.

ELLIOTT WAVE ANALYSIS OF GOLD

CYCLES
Gold, like the Stock Market and almost everything else, trades in alternating 16, 18 and 20 year cycles. Since Gold completed a 20 year (1980-2000) Bear Market in early 2001, we should now be in a normal alternating 16 year BULL MARKET that will most probably terminate by the second quarter of 2017.

WAVE I was an 8 year normal 5 wave affair (as labeled) that topped out in 2008 and lasted 775 points (255 to 1030).

WAVE II was a short, very bullish double Zigzag that ended after only 9 months in October 2008 and was a $295 (.38 X $775) a most common normal Fibonacci Elliott wave correction.

WAVE III ( which we are still in) will probably last time wise, 61.8 % of Wave I or approximately 5 years, terminating in 2013 at either 1.6, 2 or 2.38 X $775 or ($1240, $1550 or $1812) added on to Wave II low of $735 giving us WAVE III targets of either $1975, $2285 or $2545. Thus far, we have only completed Wave 1 and 2 of III and are still in Wave 3 of III and are only working on Wave (4) of 3 of III.

WAVE IV will alternate with WAVE II being a drawn out Diagonal Triangle lasting about 3 years.

WAVE V will be fast and furious lasting only about 1 year and if we use the last Bull Market (1973-1980) as guidance, the last 66% of the entire move, from $35 to $850, lasted only 16 days. Again, using the last Bull Market move as guidance ($35 to $850) for a 24.3 times or 2430% move giving us a target for this Bull Market of ($255 X 24.3) or $6,193.

There is no other system in the world (that I know of) besides Elliott Wave that would ever even dare to make this kind of a prediction both as to time and/or Price objective.

Is this projection guaranteed? Of course not, but It could be, assuming that I did not make any errors along the way in my calculations. Since I used a number of approximations with a few of my own assumptions and with gold trading 24hrs a day all over the world, I could not possibly be 100% accurate, but it should be pretty darn close judging by the accuracy of my last 7 years of using the exact same system that I just described and that I have used to make my overall GOLD and Stock Market projections. All the analysis ignored the Government's manipulation of both markets as well as Interest Rates and the Money Supply by treating all of it a just NOISE.. Let's also not forget all the fudged numbers that governments around the world keep throwing at us. So how can anyone possibly make long term projections? Simple - all the noise is part of Human Nature and Human Emotions and is therefore factored in to the swing in human emotions, which in actuality is what makes prices fluctuate. So I for one am sticking with ELLIOTT WAVE.

GOLD: WHERE TO IN THE NEAR FUTURE?

First of all, we should stop and consider whether Gold is truly overbought and whether the current up-leg has really run its course. None of you should be surprised, since it is a consistent and oft repeated theme of mine, when I tell you that PAST IS PROLOGUE. So let us examine some of the past Waves as to both their percentage gains and the elapsed time each of the Waves lasted. To date, the current Impulse Wave has only lasted about 1/3rd the time and traveled half the distance (percentage wise) of the last 2 significant advances. Since we are in a 3rd Wave, which is never the shortest and is in most instances the longest of the 3 Impulse Waves, it is also obvious that this 3rd of a (III) Wave that we are/were in, is an Extended Wave that still has a ways to go.

TIME WISE: We are still only about half way through this 16 year Bull Market for GOLD.

IS GOLD OVERBOUGHT?

While it is true that Gold is in overbought territory, momentum indicators are nowhere close to their uppermost confines that they usually get to before reaching a significant peak; and are therefore still pointing higher. Up until recently, everyone has perceived Gold's strength to be nothing more than the other side of the falling US Dollar. Let me remind you of all the times I have proven to you in the past that GOLD is a market unto itself. Even though at time it looks like there is a correlation to something else, such as oil or Interest Rates or the US Dollar, it does not take very long before it ends up going its own way. So stop worrying where the Dollar is going in the short run; Gold is going higher, a lot higher. …

While Gold has been making a series of new all time highs (not adjusted for inflation), Gold stocks on average have yet to do so. In fact, the HUI is still below its 2008 high. Before this up wave is over, I am confident that the stocks will not only catch up, but will lead the way.

SILVER

With Silver like the Gold and Silver stocks, by and large, failing to make new record highs, the biggest opportunity might be in Silver mining stocks. Silver will catch up to Gold at some point during 2010 outpacing GOLD by a wide margin.

THE SECRET TO SUCCESSFUL INVESTING:

There is no real secret; it's really quite simple to say, but hard to follow: "TO KEEP ONE'S HEAD AND WALLET WHILE OTHERS AROUND YOU ARE LOSING THEIRS."

CHARTS: Will follow in a few days or as soon as I can get someone to help me put them all together in a form that I can send you.

 

GOOD LUCK AND GOD BLESS

 

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UNCOMMON COMMON SENSE
Aubie Baltin CFA, CTA, CFP, PhD.
2078 Bonisle Circle
Palm Beach Gardens FL. 33418
aubiebat@yahoo.com
561-840-9767

The world’s gold supply increases by 2,600 tons per year versus the U.S. steel production of 11,000 tons per hour.

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