Gold don’t look so good

As with the equity markets, gold is looking unhealthy. The difference being that gold’s downdraft should be countertrend, while I have little doubt that the long term trend for the equity markets is down. Fundamentals are always deceiving, as the dollarr will ultimately go the way of all paper, but markets never move in straight lines.

Using the same logic as before, if Wave 1 was 433 down to 370 in 86 trading days, Wave 2 looks to have peaked at 411, a 65 percent retracement in 46 days. The next buying opportunity should be somewhere in the vicinity of 348, perhaps somewhat lower, if Wave 3 is bigger than Wave 1, presumably sometime in November if the pattern holds. (These waves are an order of magnitude lower than the equity market waves I previously discussed, hence the shorter time frames.)

This is of no concern at all if you’re holding long-term bullion, but last week probably would have been a good time to move out of your trading positions preparatory to picking it up. You still might want to consider doing so if the price drops below 389 next week, as chances are that you’ll be able to buy at a 12 percent discount in the near future.

I’m still not completely sold on Elliott Waves, especially on the timing calls, but if they’re correct on the dollar hitting the high 90’s, well, that will be truly impressive indeed. I can’t think of one economist or financial analyst who thinks the fundamentals call for anything but a dropping dollar. But markets never move in a straight line, and if you think about it, plunging equity markets would move a lot of people into cash….