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Silver and Gold Rally? The Real Deal Has Not Yet Arrived

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So far the bottom can not be confirmed.

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So, as some people see ghosts, I see market patterns. And, those patterns take the shape of Elliott Waves. But, sometimes, even Elliott Wave patterns do not provide 100% clarity, and this is one of those times and we are experiencing it in the precious metals.

At my own website, I have an exceptionally large group of talented Elliotticians, both among the staff and among the membership. And, within that elite group, I have seen multiple wave counts on the metals right now which all make sense and are all quite feasible. But, when multiple counts are all strongly possible, it does not lend itself to anything near certainty. Of course, there is one thing they all have in common: No lasting low has yet been struck.

And, with no lasting low being struck, the market can still drop lower and lower until we reach our next bigger target in the 98 region in the SPDR Gold Shares (NYSEARCA:GLD). However, we are now within a region above 115, mentioned last week, which can serve as support for a larger degree b-wave, and set up a c-wave higher before we begin the final decline in this 2+ year correction in the metals.

There has been one more development over the past week which is noteworthy, and supports us seeing one more smaller drop to complete a b-wave. It seems as though the daily slow stochastics on silver are no longer imbedded, which usually is suggestive of a 4th wave rise before a 5th wave is seen on positive divergence. This now sets up the technicals on the daily chart in alignment with the 144 minute charts in potentially classifying this current decline from the 138GLD region as a b-wave, which has me looking for a strong c-wave around the corner.

So, while it is surely possible that the next low that is struck is the final low in this 2+ year correction in the metals, I do not see that as the most likely scenario at this time. Rather, I would see it as the bottom of a larger degree b-wave. However, I would still be a buyer of longer term positions, including physical holdings, if another drop is seen over the next week or two.

So, in summary, as long as GLD can stay below 121, I will be looking for one more drop to complete a wave v of the c-wave of this b-wave, and potentially set up a rally which will take us through the 123 region, on our way to a minimum target of 131.50, with the potential to head back to the 136-140 region. A break through the 123 before hitting another low would be my initial signal that the bottom of the b-wave is in, and a c-wave has begun, especially if we complete a 5 wave 1st wave through that 123 region. However, a strong breakdown through the 115 level would have me looking to the 107-109 region, and ultimately targeting the 98 region sooner rather than later.

As for silver, primary support still is over the 18.30 level in the Mini Silver Futures Contract, with the 17.25-17.75 region just below there. A strong 5 wave move through the 20.50 region would be the initial signal that a c-wave up to 26 is in progress.

When all is said and done, we could very well be on the verge of a nice rally about to hit the metals, but I do not think this will be the "real deal" just yet.

Editor's note: Avi Gilburt is author of ElliottWaveTrader.net, a live trading room and member forum focusing on Elliott Wave market analysis. Avi emphasizes a comprehensive reading of charts and wave counts that is free of personal bias or predisposition. His Elliott Wave analysis appears frequently on several financial news sites.

Read more:

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Postions in long GLD intermediate calls, short long-term puts, and long SLV LEAPS.
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