Bobby,
I see 2 scenarios possible on the XAU:
The first and most likely agrees with your scenario of the recent (10/2) high being the 5th wave of the 1st wave from the bottom, and we're in a wave 2 correction now. I have the beginning of that 5 wave move on 8/31, with wave 1 ending at 9/11's high, wave 2 ending at 9/22's low, wave 3 ending on 9/25's high, and wave 4 ending on 9/30's low, and wave 5 ending on 10/2's high. If this scenario is correct, thus far, the wave 2 correction has been friendly, implying that the large degree wave 3 forthcoming will be a barn-burner.
The second scenario I see is that the recent high was the completion of 3 of 3 of wave 1 from the lows. From wave 2's 9/22 low, the move to 9/25's high would be 1 of 3, the low on 9/30 2 of 3, and 10/2's high 3 of 3, and we are currently in the 4 of 3 correction. That, of course, would imply further upside before a significant wave 2 correction arose.
Whichever the case, Gold and gold mining stocks are definitely in a bull market now, and should be added to portfolios as long term holdings. The Dollar has already fallen 10% in the last month, and should deteriorate further as our government prints money to bail out other governments, banks around the world, hedge funds around the world, corporations who can't pay their debts because they spent all their money buying back their overpriced stock...etc.,etc. ad nauseum.
As long at the XAU stays above that lower channel line (currently at 71.8), and gold above its lower channel line (currently at 294.3), goldbugs stand no chance of getting squashed.
Regards,
David |
