Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Gold Close to Confirming a New Breakout to All-Time Highs

By

Be prepared to go long gold once it is over $1630 per ounce and buy dips along the way up to $2300 into the summer of 2013.

PrintPRINT
Back in the fall of 2011, I was warning my subscribers and the public via articles to prepare for a large correction in the price of gold. The metal had experienced a primary wave 3 rally from $681 per ounce in the fall of 2008 to the upper $1800s at the time of my warnings in the fall of 2011. A 34 Fibonacci month rally was sure to be followed by an eight to 13 month consolidation period, or what I would term a primary wave 4 correction pattern.

We have seen gold drop as low as the $1520s during this expected eight to 13 month window. But at this time, it looks to me like a break over $1630 on a closing basis will put the nail in the wave 4 coffin. I expect gold to rally for about eight to 13 months into at least June 2013. Our longstanding target has been in the $2300 per ounce arena in US dollar terms. Some pundits have much higher targets in the $3,500 per ounce or higher area, but I am using my low end targets for reasonable accuracy.

This 5th wave up can be difficult to project because 5th waves in stock or metals markets can be what are called "extension" waves. This means they can have a potentially much larger percentage movement relative to the prior waves 1 and 3 of the primary bull market since 2001. You can end up with a parabolic move at the end of wave 5, where those $3000 plus targets are possible. I expect the 5th wave to be about 61% of the amplitude of wave 3, which ran from 681 to 1923, or about $1242 per ounce. If we were to apply that math, we come up with $767 per ounce of rally off the wave 4 lows. $1520 plus $767 puts us at $2287 per ounce, or roughly $2300 an ounce as a low end target.


Click to enlarge

In summary, crowd behavior is crucial to the next coming movement in gold and it could be a sharp rally that catches many off guard, much like the downdraft last fall did to the bulls. Be prepared to go long gold once it is over $1630 per ounce and buy dips along the way up to $2300 into the summer of 2013.

Twitter: @activetrading

Editor's Note: David Banister is the chief investment strategist and co-founder of ActiveTradingPartners.com, a small-cap portfolio and market advisory service.

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
< Previous
  • 1
Next >
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

PrintPRINT
 
Featured Videos

WHAT'S POPULAR IN THE VILLE