Elliott Wave Analysis: No Coincidence Gold Traded into July Low then Begins Uptrend

By Lawrie Williams

Received an email today from Peter Goodburn of Elliott Wave technical analysts, Wavetrack International who had just read my recent article on whether the major precious metals had indeed reached their bottoms – see:   Have we hit gold's, silver's and pgms' bottoms yet? and reminding me that on their analysis it was no coincidence that gold had traded down to their original downside target of $1096.48-93.15 (actually a little lower) - predicted back in May last year - and then put the brakes on and started to move higher.  While the timing took over a year longer for this to come about than originally forecast (See my article on Mineweb at the time: Gold to fall to $1,100 then skyrocket – silver, platinum in behind), Goodburn puts this down to an Elliott Wave variation within its final 5th wave and notes that Elliott Wave analysis is not a timing methodology, but based on pattern and price analogy.

When Goodburn’s original analysis was made, gold was trading at around $1300 and even some of the current gold bears were not predicting it would fall below $1100 at that time – although admittedly Goldman Sachs’ Jeffrey Currie was already forecasting a fall to $1050.  So the WaveTrack bottom forecast was somewhat prescient.  Now we need to hang on and see whether this sub-$1100 level was indeed the bottom – and even more significantly for the gold bulls whether the price will now ‘skyrocket’ to achieve new highs as originally suggested.  Back in 2014 Goodburn and WaveTrack were predicting a very sharp rise to $2475 before settling back again.  Goodburn is holding to this level and WaveTrack’s latest cycle analysis suggests the new cycle will peak in March 2019.  This suggests a slower uptrend than before, but a very significant one nonetheless.

In the original analysis, WaveTrack had also been looking at specific gold stocks and the main gold indexes.  If the consultancy is even partially correct in its trend forecasting the additional leverage in major gold stocks like Newmont (which was one of those looked at specifically) would make for even greater gains.  And, at the lower end of the scale, surviving juniors with decent projects could see enormous rises.

As Goodburn pointed out in his email: “There is no debate in our minds whether gold has or has not hit bottom, is in a counter-trend rally or has begun something more meaningful. Our conviction comes from the results of gold’s adherence to the forecasts – when it performs according to the rules and guidelines of Nature’s Law, then from this, we can discern the next price development for the next several years.”

12 Oct 2015

About the author

Lawrence Williams

Lawrence (Lawrie) Williams is a well known London-based writer and commentator on financial and political subjects, but specialising in precious metals news and commentary. He is a qualified and experienced mining engineer having graduated in mining engineering from The Royal School of Mines, a constituent college of Imperial College, London - recently described as the World’s No. 2 University (after MIT).

e: lawrie.williams@sharpspixley.com