The GOLD Bull is far from dead yet

GOLD- has been consolidating since late August 2011 highs of 1923 spot price.

Prior to this, we saw a 34 month fibonacci time period rally from 680-1900′s over a 5 wave pattern. As we approached those highs I warned my members and the public of a parabolic blow off top for wave 5 of primary wave 3.

Now, we are not quite but almost at 8 fibonacci months of corrective period and GOLD has taken a back seat to stocks and other investment options. The press is decidedly neutral to bearish on GOLD at this time.

This would be typical of a Primary wave 4 correction where sentiment gets negative but not in a hostile way.

If we look at the pattern of GOLD since the 2011 highs we can potentially see a 5 wave triangle forming. This current dip to the low 1600′s would be wave 3 of that triangle, and a wave 4 bounce up would follow next… followed by a wave 5 dip for the final pullback.

If this pattern is indeed correct, then this current pullback we are in is your best opportunity to accumulate GOLD before a Primary wave 5 up confirms.

I realize I have mentioned 1523 as the LOW of wave 4, and that is because it is the low. However, wave 4 continues to consolidate marking time. Usually the lowest point in a 5 wave triangle is of course the first leg down from the highs of Wave 3. 1523 served that purpose and so far the wave 3 lows of this 5 wave pattern are around 1620 spot.

Bottom Line? We have been in a wave 4 primary correction since August 2011 in GOLD and the price low was already hit at 1523. What GOLD bulls want to see next is a power move up toward 1700 or a bit higher near term, followed by a wave 5 pullback… and then a big breakout to the upside.

I remain long term bullish on GOLD unless this pattern disintegrates, which I do not expect. This is why we are looking for GOLD stocks to bottom soon in the GDX ETF 43-47 ranges.

David Banister

The Market Trend Forecast

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