The WaveTrack gold forecast – could this be right, but a year late?

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.

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$2300 gold in 3 years – Incrementum

In gold we still trust! – Incrementum’s 140 page positive gold analysis

Ronni Stoeferle and Mark Valek of Liechtenstein-based asset management company Incrementum AG’s hugely comprehensive annual treatise on gold and all the factors driving the gold market has just been released.  As always it is entitled “In Gold We Trust”.  This is always one of the best available sources of information and statistics for gold investors and particularly for those who follow the Austrian School of Economics.

The 2015 edition of the report contains a wealth of insights for all types of investors. It takes a look at the big picture in the financial system, from the point of view of the unusual monetary policies. This is the ninth edition of the report. Below is the executive summary from the report, as well as a link to the report itself to be downloaded or read online:

After the barely averted implosion of the financial system in autumn of 2008, we are now in the seventh year of world-wide central bank experimentation. We have all become guinea pigs of an unprecedented attempt at re-inflation, the outcome of which remains uncertain. Questionable monetary policy ventures like quantitative easing and negative interest rates are a direct consequence of a systemic addiction to inflation.

The global financial architecture remains in a fragile state. Disinflationary forces have dominated since 2011. The systemic instability between inflation and deflation – monetary tectonics – culminated in a “disinflationary earthquake” in the second half of 2014, as all industrial commodities and every paper currency lost enormous ground against the US dollar.

Widespread, chronic over-indebtedness is ratcheting up the pressure on monetary authorities to break the deflationary trend and finally generate rising price inflation rates. Gold has always been the best hedge against excessive inflationary efforts.

We are convinced that we are now close to a decisive fork in the road: the disinflationary trend will (have to) be broken. Rising price inflation rates are possible both in conjunction with a revival in economic activity and in a stagflationary environment. In both cases, inflation-sensitive investments including gold and gold mining stocks will benefit.

The majority of market participants have gradually abandoned all concerns over inflation in recent years. This is reflected in exceptionally low inflation expectations and the composition of investment portfolios. The exit from the current “low-flation” phase could prove to be the “pain-trade” for most investors.

From a technical perspective, the picture is not unequivocal. The downtrend hasn’t been broken yet. However, pronounced negative sentiment indicates resignation among gold bulls. We believe a final selloff is possible. During such a sell-off, the support at USD 1,140 could be tested. A reversal following such a test would be a reliable indication of a primary trend change in the gold market.

Based on the “big picture” analysis that is packed into this report, we see no reason for a change of course: In gold we (still) trust. We are firmly convinced that gold remains in a secular bull market that is close to making a comeback.

We expect to see a final trend acceleration at the end of the cycle. We thus decided to set a time horizon of three years – June 2018 – for our long-term price target of USD 2,300 to be reached.

To download of access the full report, click on In Gold We Trust 2015