I hear sirens in the night and people screaming, but where is the fire? I don't smell smoke, I don't see the flames and I don't know where the excitement is centered.....it seems everyone has felt the burn on their skin....but not me. This is eery and I will be the last one to know what everyone else knows, I suppose. That bothers me. Maybe these rose colored glasses of mine need a new prescription? Hey, anything is possible.
But in the meantime, while feeling increasingly isolated, alone and indifferent, I'll share with you what I see and how I make sense of gold's current situation.
|Click on any chart to ENLARGE|
The 2006 parabola was followed by the shortest and most shocking D-wave ever. In just 22 trading days it retraced it's C-wave by 53%!
The first intermediate cycle of the C-wave that followed was rather brief - a mere 12 weeks and used only two daily cycles. This was followed by a second intermediate cycle of much grander proportion, using 6 daily cycles - the final two of which were left translated.
The first IC retraced 56.9% of its advance and dipped just below the 200 dma. The second IC retraced 50.2% of its advance and closed below the 200 dma on its final day.
I guess you are wondering why I am writing about gold's behavior in 2007? Hang on, I'm about to get there......
The chart above is one I posted a week or so back. It shows my observation that this C-wave's first IC was right translated, consisted of 5 daily cycles of which the final was left translated. Very standard stuff.
It also showed my thinking that the second IC was comprised of a first daily cycle that had just concluded on Day 28 and was right translated. Again, very standard stuff.
Well, I was wrong. The bull was not done fooling people and it fooled me too.
Very similar to the fake out manuever it performed in early February 2010, it treated all arrogant enough to think they had it figured out (starting with myself) to one last mighty buck - thrusting itself below the 200 dma. With everyone dizzy and confused gold then took off and never looked back.
The chart above restates my understanding of what is going on. That is, the first IC has concluded as of yesterday - Day 31 of a stretched and final daily cycle. It had 6 daily cycles of which the final two were left translated (as in 2007). Price reached somewhere around $1662 which is a perfect 50% retracement of the IC (as in 2007).
The concern regarding both gold and the US Dollar falling at the same time is a valid one. My observations of that correlation are that this condition does occur and provided it is not prolonged, gold will decouple itself and reverse direction higher as the buck continues to plunder. The time periods from which I offer this observation are:
Sept 2003 and
Another time I will detail my 2008 story which will make clear why I will not sell my positions, no matter what the analysis....but for now I gotta go to work.
It's a bull market. Be sure of that, always!