Where Next for Gold, Silver and SP500?
Source: David Banister, Market Trend Forecast (4/25/11)
"Crowd recognition means we're in the biggest of the 13-year bull."
The gold and silver movements I outlined a few months ago well in advance of the current bull moves. I had suggested we would see $1,525–$1,550 on gold at the next interim peak back in late January from the $1,310 lows. So far we have hit $1,508 and near term $1,518 is likely before a pullback to the $1,480 ranges. Silver has run-up to my 45–47 window that I forecasted back when silver was in the mid $26 ranges. The question is then, what happens next?
Back in August of 2009 I forecasted that we were about to enter a very bullish five year window for the precious metals, and this is based on my theory of a 13 Fibonacci year bull market that began in 2001. Crowds move in reliable patterns and my opinion is the movement we are seeing now is the biggest of the 13-year bull because there is "crowd recognition." Recall the huge bull market in tech stocks that began in 1986 and ended 13 years later in 1999 with a massive spike to 5,000 on the NASDAQ. The final five years were the best for investors before the crash.
Looking at the current precious metals bull market, we are in year 10 now and it's like 1997 in the tech stocks—the best is still yet to come. But there will be peaks and valleys along the way as the bull knocks everyone off the whole way up; most recently at $1,310 in January and only a few weeks ago at $1,382, for instance. When I wrote the August 2009 article, gold was around $900 per ounce, and now it's $1,508. In August of 2010 I then forecasted that silver was about to start a massive run from $19 per ounce, and since then we have rallied to near $47 in just eight to nine months. Silver is poor man's gold, and my theory really was simply that investors as a herd would view silver as "cheap" and rush to buy it relative to gold, which would be viewed as "expensive." The bottom line is, intermediately, we are getting close to short-term tops in both silver and gold, and corrections will ensue. . .but those will again be buying opportunities.
Below are my latest views on gold and the near-term direction:
The equities markets are also in a multiyear bull market and in the most bullish of the phase, as well. We began in March of 2009 and ran up for 13 Fibonacci months to April 2010 where I forecasted an interim top. Since then, we bottomed in July of 2010 in a wave 2 correction that was a 38% Fibonacci retracement of the 13 month rally. The rally to the 1,343 highs was only wave 1 of a new 5-wave structure to the upside. The recent correction that surrounded the Japanese earthquake was another wave 2 down in sentiment, only to be followed by a powerful rally of almost 100 points on the SP500 index. This type of "shrugging off of bad news" reaction is typical of powerful major 3rd waves in Elliott Wave terms.
The most recent action bottomed at 1,295 on the SP500 and that was minor 2 down, and now what you will see, if I'm right, is a huge move to over 1,400 on the SP500 as the 3rd wave of this recent structure off the 1,240 futures lows of March, begins to take hold. Strap on your seatbelts because this market is going to blast past 1,400 and on to 1,500 this year. You will also see the NASDAQ lead the charge and make a power move into the 3,000s, as well.
Below is my latest chart on the SP500 Index:
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