Gold Price - Where is it heading?

[Sean K]

Re: GOLD Where is it heading?

Wavepicker, are you saying this has been the counter trend or the rise in gold will be the counter trend. (I'm scratching my head)

There's only a couple of crazy bears out there saying that gold is doomed. Most analysts are saying 'long term bull' for gold.

 

[wavepicker]

Re: GOLD Where is it heading?

Wavepicker, are you saying this has been the counter trend or the rise in gold will be the counter trend. (I'm scratching my head)

There's only a couple of crazy bears out there saying that gold is doomed. Most analysts are saying 'long term bull' for gold.

Kennas,
Personally I beleive gold still remains in a secular bull market. If that is the case then this mini crash will be a countertrend move within that long term secular bull. However this may only be the first leg of the countertrend move both in terms of price and time. Remember that this bull was 6 years in the making. It's going to take some time to correct this move. I estimate about 2 years. Using the 1970's gold bull as an analog, back then gold moved from $50 to $200 from 1970-1974. It then spent the next 2 years correcting back to the $100 level before resuming it's bull all the way to $880 in 1980. The countertrend move was just a springboard for it to move to higher.

Earlier in this thread I posted a monthly chart showing that gold moves in an 8.5 yr cycle. That cycle is 62 months along and as such is pointed hard down. This cycle bottoms in 2008/9. It is important to remember that the cycle bottom may not necessarily coincide with the ultimate low in gold. It might line up with a higher low after price eventually bottoms. This should just be used as a guide.

As for the current decline I am looking for a low that will lead to a rally that will correct the current down move.I beleive this will just be a relief rally(and not carry to a higher level) before price eventually carries to lower levels in the next couple of years. Either way, after this rally is finished volatility and rate price change will probably slow.

This just my opinion and it may well be wrong. Anything is possible in the market.

Cheers

 

[MichaelD]

Re: GOLD Where is it heading?

...a very large lesson on trading should have been learned by many here. The way to become a better trader is to take this experience and learn from it.

Hear hear!

(an off topic rant follows)

I was, like many others, lucky to begin my trading career in the bull run but fortunately have learned one lesson in sufficient time to (hopefully) survive this correction/bear.

No matter what, you must preserve your capital at all costs. If you lose your capital, you cannot play the game any more.

Personally, I have developed one positive expectancy system and have backtested it in as many market environments as I deemed necessary, including bears and crashes. So far, the system is trading in accordance with its tested parameters (less than 2% closed equity drawdown so far).

The fear factor, however, is absolutely incredible, even though I understood what to expect in these market conditions in advance.

The next step - to learn to trade a bear profitably - to capitalize on the fear.

 

[Smurf1976]

Re: GOLD Where is it heading?

IMO gold is in a secular bull market but at some point in that bull run will undergo a major correction (as per gold in the mid-70's or stocks in 1987). Whether or not this is that correction is the question...

 

[Dr Doom]

Re: GOLD Where is it heading?

All opinions offer valid points, but I wonder how technology is playing a part in all this. Back in the 70's it was a manual system of trading whereas these days it's all electronic. Transposing a trend from 35 years ago to todays markets may need a 'fudge' factor to take account of this. Todays markets are so fickle and fast that what happened over months and years back then plays out over weeks and days now. I'm looking at sideways action till September to purge all the doubters then the game will be back on for young and old.
I am long term into gold, and have established postions in stocks some years ago, so these fluctuations don't concern me at all, in fact I am adding to the portfolio. As long as George Bush & Helicopter Ben are in charge I can sleep at night.

 

[wavepicker]

Re: GOLD Where is it heading?

All opinions offer valid points, but I wonder how technology is playing a part in all this. Back in the 70's it was a manual system of trading whereas these days it's all electronic. Transposing a trend from 35 years ago to todays markets may need a 'fudge' factor to take account of this. Todays markets are so fickle and fast that what happened over months and years back then plays out over weeks and days now. I'm looking at sideways action till September to purge all the doubters then the game will be back on for young and old.
I am long term into gold, and have established postions in stocks some years ago, so these fluctuations don't concern me at all, in fact I am adding to the portfolio. As long as George Bush & Helicopter Ben are in charge I can sleep at night.

Dr Doom,

Imagine I picked out the following charts and rubbed out the labels and dates:
-1929 DJIA Crash
- DJIA Crash of 87
-Nasdaq Crash
-Nikkei 225 crash

Then I showed them to you and asked you to differentiate between a modern market and a market of 10, 20, 30 or 70 Yrs, could you do it?
Absolutely not, because you are looking at fractals. People have not changed in the last 100 yrs. The same emotional factors propel markets these days as did 70 yrs ago. Those are: hope fear and greed. That has never and will never change.

Cheers

 

[mit]

Re: GOLD Where is it heading?

Actually I think the opposite is true. The increased amount of information and the deeper liquidity makes it harder for groups of individuals to manipulate the market.

I'm reading about the history of Wall Street, I'm up to the 1890s and so far it is just a history of individuals (better known ones Rockerfellers, Vandabuilts, JP Morgan) manipulating the market and stripping companies for their own benefits. There had also been market crashes about as often as we have now.

MIT

 

[mit]

Re: GOLD Where is it heading?

... I should say the only people to manipulate the markets now are the Feds. They are pretty much the cause of the current run. Economic conditions have not significantly worsened it is just that the Fed DOESN'T want to raise rates anymore but the tightening to date hasn't made enough of a dent in inflation. The Fed hopes that by speaking out that they will scare the bejebuses out of everybody and rain in consumption and borrowing. Well its worked for the market, now that's power.

MIT

 

[BlueDaze]

Gold 8.5yr Cycle

Personally I believe gold still remains in a secular bull market. If that is the case then this mini crash will be a countertrend move within that long term secular bull. However this may only be the first leg of the countertrend move both in terms of price and time. Remember that this bull was 6 years in the making. It's going to take some time to correct this move. I estimate about 2 years. Using the 1970's gold bull as an analog, back then gold moved from $50 to $200 from 1970-1974. It then spent the next 2 years correcting back to the $100 level before resuming it's bull all the way to $880 in 1980. The countertrend move was just a springboard for it to move to higher.

Earlier in this thread I posted a monthly chart showing that gold moves in an 8.5 yr cycle. That cycle is 62 months along and as such is pointed hard down. This cycle bottoms in 2008/9. It is important to remember that the cycle bottom may not necessarily coincide with the ultimate low in gold. It might line up with a higher low after price eventually bottoms. This should just be used as a guide.

As for the current decline I am looking for a low that will lead to a rally that will correct the current down move.I beleive this will just be a relief rally(and not carry to a higher level) before price eventually carries to lower levels in the next couple of years. Either way, after this rally is finished volatility and rate price change will probably slow.

Hi wavepicker,

I read your previous postings on the 8.5yr gold-cycle and found this article by David Chapman (dated 25 Jan 2005).

http://www.321gold.com/editorials/chapman_d/chapman_d_012405.html

Key extracts:

"Just as there are cycles in the stock market there are also cycles in the Gold market. One of the best cycle analysts for Gold that we read is Ray Merriman of MMA Cycles. Mr. Merriman has identified what he believes is as eries of 8.5 year cycle lows in Gold. Our monthly chart of Gold shows that there have been 4 observations of this 8.5 year cycle with lows seen in 1976, 1985, 1993 and the April 2001 bottom.

The next one is due somewhere in 2009-2010.

If there is a 4.25 year cycle (half the 8.5 year cycle) it is sometime in 2005 and even into 2006. Merriman also postulates that there is an 18.5 month cycle of lows as well. It is quite possible that low was made in May 2004.

Merriman believes that the cycle of gold lows has a bigger 24year cycle and it is made up of three 8.5 year cycles. If that is the case 2001 would have ended that 24year cycle and we are in the process of new long cycle. Since this would be first leg up of a new 8.5 year cycle it should or could be the strongest as was the case witnessed in the 1970's. That tells us that we could go as late as 2008/2009 before we top out in this cycle.

Intriguing is the gold cycle of the 1970s. In that cycle Gold started at $35 in 1971 and peaked in late 1974 at around $190. Gold then went into a year and half slump falling all the way back to just above $100 in August 1976. It was from that point that it started on its sharp rise to $850 in January 1980. The biggest part of the rise was in 1979.

In the current cycle we bottomed in April 2001 and we have had a peak at in late 2004 at $431. If we are still trying to make the 4.25 year cycle low it is possible that we could remain weak on the precious metals for the next year or so. The long term bull trend line is currently coming in around $340 and rising so if we broke through $400/$410 then a collapse to those levels is possible.

Major support for Gold remains at $400/$410 and if that zone is broken the trend would definitely change to the downside. But there is also a bullish case that suggests that we may just continue the upward trend."

If I understand both of you correctly, to summarise and project/estimate:

Gold Cycle
- 8.5yrs or 102mths
- 3 sub-cycles of 34mths
- Last bottom in 14/05/2004
- Nex bottom in March 2007
- Peak in April 2008
- Bottom in Oct 2009 (end of secular gold-bull)

Appreciate your thoughts and sharing.

 

[Sean K]

Re: GOLD Where is it heading?

Big bounce off $550ish today. According to the wave thoeries another dead cat?

 

[wayneL]

Re: GOLD Where is it heading?

Big bounce off $550ish today. According to the wave thoeries another dead cat?

I'm trading this as a reversion to the mean. There's that trendline to break before I'll hail the return of the bull.

 

[wavepicker]

Re: Gold 8.5yr Cycle

If I understand both of you correctly, to summarise and project/estimate:

Gold Cycle
- 8.5yrs or 102mths
- 3 sub-cycles of 34mths
- Last bottom in 14/05/2004
- Nex bottom in March 2007
- Peak in April 2008
- Bottom in Oct 2009 (end of secular gold-bull)

Appreciate your thoughts and sharing.

Hi Bluedaze,

I was not aware of Ray Merrimans cycle analysis. Thankyou for that.
The only cycles analyst that I have heard is working with gold cycles is Tim Woods at:

http://www.cyclesman.com/
he mentions a 9 year cycle

I stumbled across the 8.5 cycle after quickly about 6 months ago in the monthly chart. This was very easy to find as the 8.5Yr cycles low to low have been quite consistant over the last 30 yrs.

Those dates were only meant as a guide and should not be used in isolation for use in market timing. There are a number of reasons for this:-

- Although market movements may appear periodic they in fact are not(although in this case as mentioned before the 8.5Yr cycle appears to be remarkably consistant!!)

-market movements appear to exhibit motion that is more cyclic instead. By this I mean that they appear similiar but the period, amplitude and phase may vary slightly from cycle to cycle.

Sometimes when a cycle has been identified all of sudden it misses a beat and dissapaears only to re appear again in the future.

Cylces are dimensionless. This means that they do not have to line up exactly with a major low in prices. As stated before the expected low in Oct 2009 may or may not coincide with a lower low of wave A $542.
It may just as easily coincide with a higher low after gold bottoms in the current correction. This is why it's important to have other tools as well at our disposal help us making our trading decisions.

If we are lucky enough to get a lower low that lines up with the bottom of the 8.5 yr cycle in 2009, then this maybe a point from which the current secular bull market in gold continues.

Cheers

 

[GreatPig]

Re: GOLD Where is it heading?

I'm trading this as a reversion to the mean.

Which mean?

Except for this last year, the mean for gold must be way down in the $400's somewhere.

GP

 

[wayneL]

Re: GOLD Where is it heading?

Which mean?

Except for this last year, the mean for gold must be way down in the $400's somewhere.

GP

OH! OOPS! I was vague huh!

I meant the short term mean, probabably best represented a linear regression and/or ordinary trendline drawn from the high in the middle of May.

Cheers

 

[BlueDaze]

Gold Trading Tools

This is why it's important to have other tools as well at our disposal help us making our trading decisions.

Hi wavepicker, thanks for sharing your insights.

I base my gold-trading on simple rules of buying the dips to 50DMA and corrections to 200DMA.

http://stockcharts.com/gallery/?GLD

And during oversold conditions when RSI(14) is below 45, readings in the CCI(8) below -100, and Williams %R (Wm%R) over 80.

Based on these rules, I should have bought GLD yesterday. But nagging concerns based on the gold-cycle stayed my itchy hands... Richard Russell's "Gold: Best To Go Away" sealed the deal.

http://www.321gold.com/editorials/russell/russell061206.html

The upcoming FOMC on 28-29 June was also a concern. A hint of further Fed rate hikes could kill the gold-rally in its tracks.

If this turns out to be a false gold-rally, I am positioning myself to buy at the USD$493 level.

Btw, besides EW, what other trading tools do you use?

 

[BlueDaze]

Cliff Droke - Gold Bottom Due in Early Sep 2006

Just read Cliff Droke's "A look at the upcoming 8-year cycle bottom" (June 14, 2006).

http://www.clifdroke.com/articles/jun2006/061406/art061406.mgi

"The past few weeks have seen stocks and commodities (notably gold and silver) take a beating. After peaking in May (April in the case of the NASDAQ), several major indices have declined to lower lows and most recently hit lows for the year on Tuesday, June 13. The culprit behind this decline is the 8-year cycle. This important cycle is due to bottom in September.

A word about the 8-year cycle itself is in order. The 8-year cycle is a composite of the 2-year cycle, which bottoms in even numbered years. It's a component of the Kress 120-year cycle series with a total of 15 of these 8-year cycles within a given 120-year cycle (the most recent 120-year cycle began in 1894 and is due to bottom in 2014). The 8-year cycle tends to bottom sharply but usually gives way to sustained rallies in the months following the bottom (as in the months following 1998).

The coming 8-year cycle low due around the early part of September this year should allow for a similar opportunity to buy the lows of this important longer-term cycle, and hopefully ending what has been an extremely volatile period for stocks and commodities."

He is new to me so I can't judge his accurancy.

But his tendency to cite various multi-year cycles casts doubt in my mind... akin to astrology.

Gold and the 6-year cycle (September 27, 2005)
http://www.clifdroke.com/articles/sep2005/092705/art092705.mgi

The 10-year cycle and its effects (April 7th, 2004)
http://www.clifdroke.com/articles/sep2005/092705/art092705.mgi

wavepicker, your thoughts?

 

[Sean K]

Re: GOLD Where is it heading?

Blue, I'm beginning to think these 'waves' are a self fullfiling prophecy! If enough people think it will happen, it will. More of this, and I know when to buy and sell. Cheers!

 

[tonyc]

Re: GOLD Where is it heading?

Gold Market Update

Gold and Silver are deeply oversold and thus present a rare buying opportunity.
The devastating 188$ sell off have cleaned most of the speculative long gold positions and attracted speculative short gold positions. This is the time to be cautiously bullish. Long term Investors (savings) should just take a position and hold it for years to come. I highly recommend that you get at least some physical gold and keep it handy.

Traders should be extremely careful and manage risk wisely. I do not recommend trading gold for no one but the most professional experienced traders. Holding a long term gold short position is a death wish in my opinion. Is this time shorts are going to sweat – time will tell…


Technically Gold have completed an Impulsive extended correction wave 2 of [ 3] , The next up move could be quiet long (3 0f [3]) and there is a good chance it will extended more then 313$ and will probably challenge the all time high gold price (1980). Interesting times head.


Gold & Silver Global Perspective

 

[wavepicker]

Re: GOLD Where is it heading?

Blue, I'm beginning to think these 'waves' are a self fullfiling prophecy! If enough people think it will happen, it will. More of this, and I know when to buy and sell. Cheers!

I wish that was the case kennas, but Elliott Waves are very subjective.
Ask 10 people to label the same chart and you will probably get 10 different answers and twice as many alternate scenarios!!!

 

[wayneL]

Re: GOLD Where is it heading?

I wish that was the case kennas, but Elliott Waves are very subjective.
Ask 10 people to label the same chart and you will probably get 10 different answers and twice as many alternate scenarios!!!

...and most likey a punch-up!