Saturday, November 6, 2010

Gold's 7 Parabolic C Waves - Projection $1600

I believe that gold has traded in a repetitive ABCD pattern since the inception of its secular bull market in late 2001.  The C wave of the pattern has characteristically concluded with a parabolic, near vertical ascent of price.  We are currently in a C wave and I expect that our immediate future will witness a truly exciting and hair raising parabolic advance that will likely take gold to $1,600.
This study will show you each of the C waves since 2001, and conclude with our current situation.  
One of the fascinating aspects of gold's progress from $260 in December 2001 to today's near $1,400 level is not only this repetitive ABCD pattern (7 times so far), but also the use of the 50% Fibonacci measurement to define the half way point of each parabolic C wave.

The earliest ABCD patterns were relatively small, both in terms of time frame and size, and relatively simple.  They were essentially straight line ‘near vertical’ moves. As the pattern has evolved, the C wave morphed into larger and more complicated structures while maintaining its fundamental and well defined mold. Following the near vertical straight line, C waves introduced a double top structure, followed by the use of bull flags and then the consolidation pennant.  The present C wave appears to have morphed into a gigantic 3 phase super structure, surpassing all previous C waves in complexity and size.

So let's begin our study with a look at the first C wave - in 2002.
Right from the very first ABCD pattern, gold uses the A wave to announce the significance of the 50% Fibonacci level.  The top of this first C wave defined the 100% Fibonacci level and the midpoint consolidation of this first C wave occurs at the 50% level, as well.
Click on the charts to ENLARGE
The second C wave peaked in early February 2003.  As with the first C wave, this was very close to a straight continuous shot from bottom to top.  The 50% Fibonacci level indeed divided the wave in two equal halves, with the suggestion of a consolidation as several weeks traded above and below that level.
The third C wave peaked in early 2004 and introduced an advanced structure - the double top.  This C wave found its beginning following a perfect 38.2% retracement of the A wave and generally consolidated around the 50% Fibonacci level, though not as cleanly as either preceding C wave midpoint consolidations, nor ones to come.
The fourth C wave topped later in that same year, 2004.   A relatively brief consolidation preceded this C wave and therefore was not a skyscraper event. In fact, this C wave regressed to the simpler structure of a straight line, characteristic of the first two C waves.  The 50% level again saw price weave above and below for a few weeks.  Following this consolidation the wave concluded its final leg to the top.
The fifth C wave became the largest C wave to date as it did not top until May 2006, some 30 months after the preceding C wave peak of late 2004.  This time, the 50% level acted as a resistance level.  Gold created a 2 month long bull flag consolidation just below this level before breaking out and completing a spectacular parabolic rise that reached $729.  Interestingly, bull flag continuation pattern was initially introduced into this C wave from a lower level. 

The sixth C wave cleverly uses a new trick in its evolution - the pennant - as a midpoint continuation identifier just at/below the 50% level.  Notice how the 2nd and concluding half of the C wave is no longer simply a string of green candles.  The bull, as he has aged, has learned to buck.  And buck he does!  However, the 50% level continued to foretell the ultimate peak at $1,029.
In the introductory paragraphs of this article I mentioned that the current C wave appears to be a gigantic structure that may ultimately be comprised of three phases.  Let's now look at the first phase that concluded this past December 2009, then look at the second phase that is still in progress.
This 7th ABCD structure began in October of 2008 with the A wave at $680.  As we have seen once earlier, the A wave makes a near perfect 38.2% retracement to get the C wave started at $865. Through a series of ledges this first phase of the 7th C wave rests and consolidates at each Fibonacci level (23.6% and 38.2%) until reaching the 50% level.  After spending 4 weeks there, gold makes it parabolic move to reach $1,227 in a little over 4 weeks.
Now let's look at the currently ongoing second phase of this massive C wave and see if we can make a reasonable guesstimate of when and where it will top.
We know that gold's C waves have extensively employed the 50% Fibonacci level.  So I am going to guess that it will be no different now, than before.  That is, the $1,227 price reached in Phase 1 will be identified as the midpoint, or 50% level, of the current second phase.  
It turns out that gold is then projected to reach $1,600 during the early/mid part of December.
Out of curiosity, I wondered how the current weekly cycle, which began on July 28, 2010, would fare under the 50% concept.  It seems that gold's consolidation of the past month recent could be thought of as a 50% level, a midpoint consolidation.  But where would that project price?
The chart says it all.  Same place.  $1,600.
I guess at this point I should warn every reader that they have read a convincing argument for $1,600 gold, but that anything is possible.
OK.  Consider yourself warned.  
In the mean time, I am going to invest in gold and related products as though it is going to $1,600 next month.

Best wishes for your trading and investment success!

John Townsend

The TSI Trader is a website dedicated to the deployment of the True Strength Index (TSI) indicator for buy and sell signals related to gold’s secular bull market.  The TSI indicator is freely available at FreeStockCharts.


  1. Great analysis as always John. And I would imagine that the gold / silver ratio will continue to decrease to about 50:1 in that time span putting silver in the neighborhood of around $32 mid-dec?

  2. Thanks. Yeah, the $32 area is what I came up with on last weekend's post. Should be that, if not more by mid-December. Best guess, of course.

  3. You have made such a superb presentation that it seems you would be the ideal Devil's Advocate. What is the strongest argument that your scenario will not be realized?

    I see that bullish sentiment readings on the US Dollar are nearing zero, and that the mainstream media has recently adopted an apocalyptic view of the American currency.

    Are you concerned that a hard short-covering bounce in the Dollar would derail your scenario?

  4. I'm pleased you enjoyed my presentation. Your question is an excellent one and there is an easy answer. Should Ben decide to denounce his $600B+ QE2 policy, that and only that could derail the immediate fate of gold's parabolic rise. I view the chance of that happening as virtually nil. I am quite sure that this program has been thoroughly prepared, approved and that the targets for the US Dollar's demise identified. i.e. the FED expects its action will devalue the US Dollar.

    Short-covering bounces in the US Dollar, for now, are simply the result of games traders play against each other when there are too many at the same end of the boat and fear can be psychologically injected into their human emotions. Emotional fear causes short-covering rallies.

    But the fundamentals of the US Dollar speak otherwise and 'truth' will continue to drive the dollar lower until it reaches a true extreme. Perhaps initially 74, then later 70 or 71.

    And I hate to say this, but ultimately our currency could enter a free fall that would be accompanied by severe hyperinflation and the literal bankrupting of the United States as we know it today. After all, it is difficult to pay off one's debts when no one will accept your form of payment (US Dollar).

    In later years, but not so far away, the extraordinary number of futures contracts that allow for settlement in gold, will no longer be settled in US Dollars, the world's reserve currency. Instead, those who have bought these contracts will demand that their settlement be payed in gold bullion. This issue, ALONE, will cause the value of physical gold to reach levels now thought of as absolutely absurd.

    If I had the patience, I would buy gold and related stocks for the long term and get ready. Unfortunately for me, that is no fun so I trade them. But for my readers who are true investors, I hope you consider my thoughts and invest accordingly.

  5. Hi John,
    I really apreciate your presentation about the C- Wave. But i have a question. I also follow Toby Connor Blog and Toby consider the Gold C- Wave can have one more extention to next spring. If a understand your presentation, "your" D Wave will star at mid december and not next spring as Toby Connor thinks. Am i undestanding right your analysis ?
    Thanks for your attention.

  6. Hi Carlos -- thanks for your interesting question. Funny you should mention Toby Connor because he and I are partners of Gold Scents. He does the writing and I handle the marketing.

    Anyway, you are close to understanding our analysis. We think that following the current Phase 2 parabolic - which will peak coincidentally with the bottom in the US Dollar yearly cycle low - there will be a final third parabolic phase for gold in the spring.....which will peak at the same time as the US Dollar makes its 3 year cycle low.

    Between the conclusion of our second phase and the start of the final third phase gold will have to do something. Toby thinks that if gold consolidates essentially sideways for a couple of months the third phase will be set up to begin. However, a very sharp sell off of gold price after this second phase concludes would suggest that there will be no third phase and that we have indeed entered the D wave.

    I hope this does not sound too confusing. And I encourage you to subscribe to Gold Scents so that you can benefit from the analysis on a daily basis. Toby is as sharp as they come and I am very confident he will be able to keep you on the right side of the gold market.

  7. An opinion from a reader from Germany:

    I think you´re too optimistic about your gold price prediction for next month. You should look the perspective of the Euro currency for this month. I expect on the short term a falling Euro (Ireland is getting in the EU-Zone "QE pipeline")and as a consequence, little strength for the US$ in the short term. So in other words, gold $1,450 at the beginning of next month. Don´t forget the Futures Option Expiration on gold this month (11-23) bringing a pull back of less than 4%. Then two weeks in Dec of 6-8 % correction. We will get to 1,600 by mid january 2011 and not before the end of this year.

    Anna Boeddeker

  8. Anna -- thanks for your thoughts. You could be right, I simply do not have a working crystal ball capable of seeing all the chess moves in such intricate detail.

    I do know that this weekly cycle has progressed gold higher at a rate of about $100 per month. We now have had what appears to be a 3 week long midpoint consolidation....and are headed towards the final and likely parabolic second leg.

    It would seem reasonable that gold would now accelerate its $100 per month pace - as money that has been left behind chases the obvious upward momentum. Rather than seeing days where gold moves marginally and steadily higher, as has been the case since this weekly cycle began on July 28, we could see days where gold *leaps* higher - day after day.

    If this does occur, the move simply cannot last for endless weeks.

    Your scenario implies more corrective periods - where price takes rests. If that is how this progresses, then yes, the up leg could last longer. The March 2008 parabolic C wave would be a good example to support your vision.

    Either way, it is a fine time to be invested in the gold market. And that means we will both come out winners!

  9. Hi Carlos,

    I subscribed Toby Connor Gold Scents and ia have to say that helps me in my investments.

    I have a question for you. In the end of November i will be outside in holidays and won´t be able to follow the markets dialy. What do you suggest for my investments (AGQ) ? I put a stop on my position and let the gains follow or simply sell my position before goingto holidays ? I will be abroad from 27 November till 12 December. Since you think gold and silver may go upside to till mid december, i am not sure what to make with my agq position.

    Thanks for your help.

    Carlos Moreira

  10. Carlos - my best answer, the one I would do if it were me going abroad, would be to find an Internet connection wherever I am and trade (monitor the situation) electronically during your vacation.

    Absent that solution, if it is one, I would think putting a stop on your position is a great idea. Also, we will probably have a good idea what we are working with before 27 November so we can talk about this again before you leave.

    You know, this whole thing is only about money. And money, most certainly, is not everything. Having a great time with your family while on vacation is worth infinitely that is a concept to keep in focus, as well!

    I hope my thoughts helped you, at least a little.

  11. Thanks John,
    You are right when you say having a great time with family is worth infinitely more than money.

    We ´ll see later in this month what markets will do.

    thanks for everything.

  12. John,
    The last few days, Silver has shown more strengh than Gold.

    Don´t you think this performance may continued and as Gold go up, Silver go up even more, reducing the ratio gold:silver to 40 for example :-).

    In your opinion in the top of the C- Wave what can be the value of this ratio ?

    I have read that one factor for this better performance of the Silver is the fact that there is some short-squezze of the tremend Short Positions some banks have.


  13. Hello John - thanks for sharing this synthesis.
    I wonder why are you treating the current C wave in "2 phases". This is methodologically inconsistent with the treatment of the previous waves and may raise the doubt of twisting the analysis to make fit preconceptions.
    I am not writing this as a "criticism": my own analysis, following a different "cycles" approach confirms the wave count and the target. It is more of an exercise in self-consciousness that I am proposing.

    @ Anna Boeddeker: Interesting "local" analysis. Me too I am inclined to place the peak of the wave in January, rather then December, with a December target of 1450. Don't you see a possibility that the bottom of the current retracement has not been reached yet (at 1315) and that the events you describe might lead to a lower low? After all, 1315 is not even a 38.2% retracement (of neither 1385, former high, or 1395, most recent high).
    Of course, John, I would like to read your thoughts on this second aspect, if you care to address it.

  14. Hello John - thanks for sharing this synthesis.
    I wonder why are you treating the current C wave in 2 phases. This is inconsistent with the methodology applied to previous waves, and may raise the doubt of fitting the analysis to confirm preconceptions.
    I am not writing the above in the form of a "criticism": my own analysis, based on a different "cyclical" approach, confirms the wave count and the target. It is more of an exercise in self-consciousness which I am proposing.

    @ Anna Boeddeker: interesting "local" analysis. These are factors which certainly should play some role and I am also pondering about them. Me too I tend to place the top somewhere in January, with a December target of 1450. Don't you, though, see the possibility of a further dip, bellow the current low at 1315? After all, 1315 is not even a 38.2 % retracement (neither from 1385, the former high, or of the current high at 1395)?

    Of course, John, I would like the read your thoughts on this question as well, would you care to address it. Thanks.

  15. Contulmmiv - I would love to give this some thought and perhaps a better response, but have to go to work now and will be away from the computer for another 7 hours.

    Actually, I am treating the C wave in potentially "3 waves". Last Dec coincided with the yearly cycle low in the US Dollar. This wave will coincide with this year's cycle low in the US Dollar and the potential third phase will coincide with the 3 year cycle low in the US Dollar later this Spring/early Summer.

    With just a minute more to write, I would suggest that the enormous sized consolidation that preceded this C wave is precisely the rationale for the size of this C wave. The other thing I consider is the degree to which gold is able to rocket above its 200 dma at its C Wave parabolic peaks. At present we are no where near a degree that suggests a parabolic top at this moment. Indeed, I think we are just 50% of the way there for this wave. Sorry, I can't write more now. Got to go. But I hope this begins to explain my thinking.

    Thanks for writing!

  16. Dear John
    I´´d like to take the opportunity to develop my assumption on the gold price predition near term before you´re coming back from work.

    @contulmmiv: 1319 (I always take London PM Fixing for analysis) was the bottom of the current retracement and you´ll never see it again!

    Next target: from 1319 +15-20% = 1520-1580 by early Dec.
    After that, two weeks of 6-8% correction = 1425-1450 by the end of this year.
    And then + 12-15% upward to the ending goal of this intermediate acting wave = 1600-1650

    That´s it!
    Have a nice week to you and all the readers

    Sincerely yours
    Anna (Munich)

  17. Hi John - thanks for your thoughts.
    I am interested in the productivity of the discussion, so I will refer strictly to what you write. Specifically, I will address the "gold cycle-dollar cycle" relation in the hope that we could get a reliable perspective of the whole process.

    IF the top of the wave is 1600, and IF it should coincide with the 3 year cycle low of the USD, THEN the two events cannot take place in the timeframes you establish, since you place the 1600 event in December, and the 3 year USD cycle low in late Spring 2011.

    There are two possibilities in order to circumvent this inconsistency:

    EITHER 1600 is reached this December on the occasion of the _yearly_ USD cycle low, and from this would follow a much higher price on the occasion of the _3 year_ USD cycle low in late Spring;

    OR 1600 remains the target for the 3 year cycle low of the USD late Spring next year, and we must establish another target for the yearly cycle low of the USD due in December.

    Under what conditions either of the two scenarios would actualize? Let's see. I will just enunciate the formal conditions to be met, refraining from speculation as to whether these conditions are actually being met or not.

    1. In order for the first possibility to be true, the yearly cycle low for the USD should occur between now and sometime in December. If I understand correctly the cycle theory you (and Gary/Toby) use(s), this should take place via the next USD daily cycle. Since the USD is now around the support at 76-75, and the next support levels are 74 and 71, the next daily USD cycle should plunge the USD down to one of these levels. In the light of the next paragraph, it is more like the USD should get to 71.
    Once the USD has broken through the support level of 71, the ensuing USD plunge will represent the dynamo for the surge of the price of gold to that “much higher level” in late Spring 2011, to coincide with the USD 3 year cycle low, whichever this will be (60ish area? 50ish area? For orientation purposes, it took a 5 points plunge of the USD Index between July 28 – October 14 to bring gold up by 200 USD; some 40 USD gold price increase per 1 point USD Index drop; this should be considered pure USD devaluation induced movement, since non-USD gold was trading more or less in a range).

  18. Not sure what you are getting at contulmmiv. My thinking is $1600 to coincide with the yearly cycle low of the US Dollar in the next 4 weeks or so. If we do not enter a D wave, that is, we consolidate sideways for a couple months, then there could be a phase three parabolic this Spring that would coincide with the 3 year cycle low in the US Dollar. If this should happen, the Dollar would be in freefall below 71 - a currency crisis - and say goodbye to $1600 gold.

  19. [Continuation][having to split the comment, the second part got lost by Blogspot. I am re-posting it belatedly, for the record]

    2. In order for the second possibility to be true, 1600 as target for the 3 year cycle low of the USD in late Spring 2011, the (roughly speaking; see refining bellow) 74/71 support levels of USD cannot be reached during the yearly cycle low of December (because if they were, see above, this would propel gold to 1600 now). IF the USD cannot reach 71/74 during the next daily cycle low (which coincides with the yearly cycle low), AND since the USD already has a low in the upper 75 area, there follows that the next daily cycle of the USD, which also brings the USD at the end of the yearly cycle, will have to bottom not far from where we are now, at any rate, between 74-76: a low, but not necessarily a _lower_ low. The_next_ low of the dollar will be a. higher than the recent low, b. at about the same level as the current low, c. a bit lower than the recent low, with a maximum boundary in the 74 area.
    None of these sub-possibilities allow for the price of gold to reach significantly higher levels in December. While only the rallying of the USD (towards 79-80) will trigger a continuation of the correction of gold (towards 1300-1280), a last daily/yearly cycle low at about the current levels or modestly bellow them will allow for a lateral consolidation, perhaps a modest advancement from the current price level.

    Do we have sufficient data to decide between the two alternatives? I purposefully left the question at the end, because inevitably, it invites lots of speculation. Anna raises important points: the euro, options expiration (and a “two weeks in Dec of 6-8 % correction” which I did not grasp: what are you referring to, Anna?). To this, there adds the possible topping of the general market and of the bonds rally, the “normalization” of the QE, etc.). I let interested readers unfold the various speculative dimensions by themselves. I was merely interested in clearing the formal setup of the analysis, as proposed by you, John.

  20. Hi John!

    I would like to answer the question (“two weeks in Dec of 6-8 % correction” which I did not grasp: what are you referring to, Anna?) from @contulmmiv if you don´t mind.

    ...from the "local" analyst;-)
    We are now riding the last upward impulse wave (started 2010-07-28) of the strongest intermediate wave (started 2010-02-05 and ending hopefully mid january 2011) of the super upward wave going to $2,000 (started 2009-04-06 and going approx. to mid year 2011).
    As always, this last wave of the intermediate cycle will have two corrective waves. The first one is always mild 3-4% and the second one stronger always stronger 6-7%. We´ve got the first upward wave $1,157-1,373 (PM London Fixings) then the first corrective one to $1,322. I´m now expecting +15-20% to $1,520-1,580 (depending less or more on the strength of the US$ Index). After that we´ll see the second pull back, always stronger because more pessimistic in december to $1,425-1,450 (correction time frame 10-15 days). Then the final wave less stronger than the mid one 10-12% to $1,650 mid january 2011 if we are lucky. After that be prepared for a massiv -12% (hard battle of two or three weeks) and the last upward wave to $2,000 by late spring if we are damned lucky again!

    During all these years I´ve been watching the gold bull market. I can tell you that time frame is quasi unpredictable and since December 2009 the currency trade swaps are acting market-distording like an elastic band. But almost always the percentage change is accurate.
    Fazit: the psychology of the numbers drive the trading market.

    Good day to "over the Altantic"!

  21. Hi Anna,
    Acording to what happen yesterday (09.11.2010) what do you suggest AGQ holders should do ? Selling their position since Silver may hve made a intermediate top ? Or do you expect the correction of yesterday will be cover the next fez days ?


  22. November 10, 2010, 12:52 GMT/UST

    Hello Anna. Thanks for bringing additional detail to your scheme, especially since between our methods seems to be a lot of affinity. I also group waves following a basic “rule of three” in waves, with sub-waves, as sub-ordinate elements, and super-wave, as a super-ordinate element. No Eliott here, and the ABC cycles method which John & Gary (& Tim Wood, I believe) use, I “translate” it in my own scheme. This is a self-generated method based solely on observation, as I understand yours is as well, so I am glad to receive independent confirmation.
    We are in agreement in identifying the beginning of a superwave in 2009, with the first massive wave structure peaking in December 2009 and bottoming on 2010.02.05.
    We are also in agreement when looking at the current structure as an important second wave component of the superwave.
    We differ as to what to include in it, and as to the relative status of the third component, expected at/after mid-2011.

    I “compared notes”, as it were, and here is what I have to say. In your account, December 2009 peak at 1225 (spot) is “wave 1” of the superwave; 2010.02.05-2011.01 is “wave 2” of the superwave (which you call “intermediate”), to top at 1650; which allows you to propose a “wave 3” around mid-2011, to take us to 2000$/oz.
    Equally in your account, this intermediate “wave 2”, is composed of impulse waves: and you identify the current process, starting 2010.07.28, as the “last” impulse wave. Looking at the chart, and in keep with some vague sense of proportions, minimal magnitudes, and durations, the only other equivalent “impulse wave” I can see is the one topping in June 2010, at 1265. My question would be: where is a 3rd impulse wave? Why the “intermediate” wave has only two impulse waves? There are a couple of workarounds which I can see: the most likely candidate would be the high on 2010.05.14 at 1250 the first impulse wave. The objection raised by the “sense of magnitudes and durations” would be that it is too close in time, and to close in the values of the top to be considered as a separate impulse wave. A strong suggestion would be to treat May-June as a double top impulse wave. Or, one could try to see 2010.04.12 , at 1167, as a 1st impulse wave: the objection would be that it is equal to the high on January 11 and, thus, belongs to the bottoming structure. It is only after it that the bottom is complete and the new structure begins. Finally, a third solution would be to postulate a 3rd impulse wave to occur after January, case in which the current one would not be “last” and the “top” would not be 1650, but whatever this true last impulse wave would raise.
    At any rate, this treatment of the “intermediate wave” leads you to postulate a 3rd component of the superwave, to occur around mid-2011.

    I believe this to be un-necessary, and that it appears in your scheme mainly because of the “crippled” construction of the “intermediate” wave, as I discuss above. (among other things, this impacts upon timing, since I believe that you are bringing it in too early: in order to make the scheme hold, you are contracting durations).
    A massive structure in 2011 would eventually occur, but not as a part of the current superwave. In my book, the current superwave consists of 1. July 2009-February 2010, February 2010-July 2010, July 2010-January 2011. Therefore, as you can see, I treat the June 2010 top as a rightful, independent component of the superwave, instead of fusing it with the one we expect in January 2011, which makes it un-necessary to postulate a third component next year. The “third component”, the 2000$ high of 2011 (or whatever new high it will be), would actually be wave 1 of a new superwave.
    Needless to say that none of the above is about “being right or wrong”. I see it as an exercise which is quite apart from “trading”, namely as part of the attempt at extracting patterns from the complex but not unruly phenomenon which we call “reality” : )…

  23. Hi Carlos,

    I don´t want to be impolite and to impose my thoughts on John´s blog.

    The correction of yesterday will be mild, in the range 2-3%, starting from $1,421 PM London Fixing, and will last a few days (100% timing frame is impossible to predict. Only God knows!). A quiet normal and "healthy" correction. Stay on this upward wave (read above again) until you reach the percentage goal.

    Have a good week and hope John isn´t annoyed of my infiltration to his blog.


  24. November 09, 2010 cca 12:00 GMT/UST

    [This was posted yesterday but, for whatever reason, did not show up; here's a repost]

    Huh... The above was way too long a comment, so I will keep the present one short and will try not to repeat myself.
    What I was basically trying to do is probably a futile feat, namely to bring precision to a fundamentally imprecise thing ("trading").
    The considerations above were meant to substantiate my doubts that the target of 1600 will be reached in December. The reasons are multiple, and that is why I preferred to keep the discussion within the confines of the formal relation USD-Gold which you proposed and which I know you to be familiar with. But, otherwise, I think the relationship is way too linear to be correct (mind you, for the short-medium time spans we discuss).
    Secondly, and more tentatively, I am not sure that a treatment in “phases” is OK (and it is from here that I started). If a late Spring 2011 “much higher high” for gold is to be achieved, I am not sure that treating that high as a 3rd phase of the current C Wave is “correct” (or, rather productive). I believe that the chart entity occurring after the top at 1600 (possibly in January) should be treated separately. This is in no way useless an exercise: because on the way we treat them depends what we anticipate by way of correction.

    Therefore, the scheme I am currently working with looks something like this: the structure which began on July 28 will top around 1625-1650 in January, when we will have a large decline of around 40% of it (thus, bringing us back to the 1400-1450 area). Between December and the top in January there would occur the third stage of this structure, which is usually crazy-parabolic, so it could occur in disregard of what the dollar does. What happens after January will indeed depend a lot on whether the USD will move towards breaking support at 71 at the end of the 3 year cycle, and plunge further down, or not. It is impossible to say if this will happen, due to the almost purely political character of the movements of forex markets today. If the break occurs, then we shall have the “much higher high” by the end of Spring but, again, it is probably more productive to treat that movement as a separate entity and not merely as a 3rd phase.

    @ Anna: thanks for clarifying your earlier post. It seems that we have similar views on the “January=1600” thing, but not on what happens between now and December. I see why you believe what you believe, and your scheme is a definite possibility which I keep in mind as alternate. In reciprocation, the primary scheme I am working with is: a low in the last decade of November at around 1355-1370, a top in December at 1450, shallow retracement to current highs, decerebrated parabolic move to 1600s in January.

    N.B. These are representations of possible processes and, thus, subject to permanent change.

  25. Hi @contulmmiv,

    You misread my explanations.
    The “intermediate” wave has two corrective waves that we are now behind us :10-03-03 to 10-03-24 ($1,136-$1,091 / -4%) & 10-06-28 to 10-07-28 ($1,261-$1,157 / -8% : abnormal correction caused by currency trade swaps).
    A cycle has always three impulse waves.
    The last one (cycle “intermediate” wave) started by $1,157 (PM London Fixings) on July 28th. In the past, the “intermediate” wave more than doubled the first upward wave of an upward cycle. First wave 09-04-06 to 09-12-02 + 39.5%. The last and third up wave of this “intermediate” wave should at least bring us + 60% being conservative. Expected time frame for mid January stay a wishful projection (time is elastic).
    After that, the second and last correction wave will unfold leading to the last strong up wave of the “mid wave” ending mid 2011, part of the “super wave” cycle beginning 2008-10-24 and ending spring 2012.

    And finally a quote for you, dear contulmmiv, from my favorite philosophe, Voltaire:
    "It is far better to be silent than merely to increase the quantity of bad books".
    I hope you like it!

    All the best

  26. Hi John and other members here,

    I am reading your articles and comment on gold via Jim's blog, with much interest, especially in the ABCD method in analysing the market.

    Can anyone of you kind enough to point me to a website where I could learn more about it, i.e. the ABCD method, especially on how each point of A,B,C,D, is determined in a chart.

    Thanks in advance for your help.

    Tom henry

  27. Hi John,

    Please put my two last comments from yesterday 10th to Carlos and @contulmmiv in your Blog. I think they are waiting for my answers.



  28. Hi Ana,
    Can you send your response to my personal mail please ? It´s

    Many thanks for your attention.


  29. Thanks Ana for your thoughts and thanks John to let her express them.

  30. @ Anna: Well, then, there is little left to add. Eventually the gold bull will carry everybody, indiscriminately: good book or bad book ; )... Regards.

  31. Dear John

    I thank you for posting my last two comments from the 10th. I don´t want to infiltrate your blog, I feel very impolite.

    If a reader is still interesting about the analysis of this gold bull market and wishes in the future to share analysis or give any comments about this subject with me, I would be glad to answer and to explain my thoughts.

    Please send for such purpose an e-mail to:

    I thank you John for your kindness and wish you success in your trading concept.

    Sincerely yours
    Anna from Germany