Elliott Wave analysis – some believe in it but some don’t, but in terms of longer term cycles it has tended to hold remarkably true – at least in retrospect. It’s always easy to be wise after the event!
But so saying, in May 2014 I published an extremely well-read article on Mineweb entitled: Gold to fall to $1,100 then skyrocket – silver, platinum in behind which looked at Elliott Wave-based technical research from UK technical analysts – WaveTrack International. At the time a fall to a little below $1100 as predicted looked unlikely with gold seemingly sitting comfortably at just under the $1300 an ounce mark and fundamentals, on the face of things, looking reasonably positive. So much for fundamentals!
The WaveTrack forecast, based on their Elliott Wave technical analysis, though was suggesting that the gold price would then plunge to just below $1100 over the following 3 months – and then enter a price path with substantial upwards momentum driving it up to a new high of around $2475 an ounce within the following six months or so before starting to turn down again. The other precious metals would follow suit – in percentage terms showing even more substantial gains, as would gold mining stocks. As readers will well know this just did not happen – at least not on the time scale then predicted.
(The actual original prediction was as follows: WaveTrack noted that the gold price had been following an archetypal Elliott Wave price cycle and that the overall ‘gold ‘supercycle’/bull market, was not yet complete and would thus see another surge which was then projected to peak at the end of 2015 or very early 2016. But in the meantime the price would fall to a projected low of $1096 (give or take a few dollars) as part of the fourth wave retracement down from the 2011 high of over $1900 – and this low point was predicted to happen in July/August last year.)
But – this August, almost exactly a year behind WaveTrack’s original prediction, gold did indeed plunge to a little below $1100 an ounce with, as we have noted before virtually all mainstream analysts predicting worse to come. Could it be that WaveTrack’s prediction is inherently correct, but out by almost exactly one year in its timing? Gold has certainly made so far a brief recovery from its recent low point despite all the adverse media and analyst coverage. China’s yuan devaluation has thrown markets into disarray and may yet be seen to have triggered the reversal in fortunes for gold that could lead to a major price pattern change and take it out of its recent bear market and back up to new highs.
Whether those responsible for pushing the gold price down to its recent lows through strange dealings in the COMEX gold futures market will provide yet another external block on this kind of price appreciation remains to be seen – but there are indications that attitudes are changing. The big money seems to be taking long positions on gold and the speculators, who had built up massive short positions will be struggling to cover – which is almost certainly at least partly responsible for the latest gold price pick up. By all accounts real availability of physical gold in the West has been diminishing as gold bullion has been exiting the area and re-accumulating in Asia where it is far more tightly held. Maybe the market is gearing up for a squeeze on physical metal which could indeed help drive gold to new highs? We remain sceptical about the speed of any such increase as suggested by the WaveTrack analysis, but stranger things have happened in the markets!
Given that Chinese demand and the new eastern markets and exchanges are perhaps key to whatever progress gold makes in the near term, as far as gold is concerned the probably apocryphal Chinese curse – ‘May you live in interesting times’ – is extremely apt for gold at present. These are indeed ‘interesting times’ for the gold market.