The Rebirth of Gold and Silver

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...The ultimate comfort is the confidence Elliott wave theory gives to see this coming and also point further ahead to events not only beyond this first bull leg but beyond to a glorious finale for silver, gold and any other asset that rallies itself against the loose foundation of fiat money...

Back in April I wrote an article entitled “The Death of Gold” which suggested a longer term correction was on the cards for gold. I was partly led to that conclusion by the headline article from The London Times dated 14th March 2008.

Three days later, gold topped at $1032 and has dropped as much as $773 for a 25% correction.

Silver has not surprisingly fared worse with a drop as great as 45% due to its thinner and more volatile markets.

We exited most of our silver positions at $18 at the end of March and have not been back in since apart from the odd drip feeding of physical bullion.

The reason was purely down to Elliott Wave analysis and the following interpretation gleaned from the five year silver chart...

In other words, when wave 5 was over expect some big action to the downside because silver is correcting the entire bull market since 2003!...

As for gold, the 38.2% retracement of $255 to $1032 (i.e. $735) may yet hold but do not exclude a 50% retracement to $644 at an extreme.

The point being this, forget about 200 day moving averages and RSI values when this kind of event happens...The ultimate comfort is the confidence Elliott wave theory gives to see this coming and also point further ahead to events not only beyond this first bull leg but beyond to a glorious finale for silver, gold and any other asset that rallies itself against the loose foundation of fiat money.

Right now, the US Dollar index is pushing former support at 80. Plenty of traders and investors are selling gold and silver in anticipation that the mighty dollar gets back above 80 and back to its old ways. They may be right, but don’t bet on another dollar bull ruling the herd again...

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