Why Gold Prices Could Be Going Below $1430 and possibly $1395? (GLD, IAU, PHYS, DZZ, SLV)

John Townsend: It feels almost ridiculous and nearly irresponsible for me to suggest that gold will fall to below $1430. Personally, I think it has fallen way too much already. In a very short period of time the value of my holdings in mining stocks have been cut in half and I have no interest whatsoever in seeing gold tank even further.

But for what it’s worth, I see a good possibility that gold has further to fall – much further.

Last summer I did some research on Gold C-wave Tops and D-wave Retracements. I think I was able to boil down the most important statistics and make some sense of the topic generally. Some of those findings include that the range of C-wave corrections (D-wave) is from 54% to 89%, that all previous D-waves corrected 50% within the first 32 trading days, and that most D-waves were in the range of 40 days, with the exception of the 2008 nightmare specimen which was 152 trading days.

One of the things I did not mention in that study is the fact that every C-wave top, with the exception of the 2002 specimen, was followed by a (one) left translated intermediate cycle.

Anyway, at the time I did this study it never occurred to me to specifically determine whether the C-waves ever/always/sometimes break their trend lines within the D-wave corrective phase.

As you may now be guessing, this is something I have been looking at very carefully today. It turns out that every C-wave has indeed broken its trend line during its ensuing D-wave. And it turns out that our current C-wave has yet to break its trend line. A price south of about $1430 seems to be the qualifier.

I’m going to show you a chart of each C-wave from 2002 and have added the relevant trend line on each. I have not taken the additional time to identify (label) the repetitive ABCD pattern, but I have indeed considered each very carefully.

Oh, before I forget, the current C-wave top was followed by not one, but two left translated intermediate cycles. That has been a new twist which I imagine should not be too surprising considering that this C-wave dwarfed all previous specimens.

Also, at today’s closing price of $1544 this D-wave has nearly retraced 38.2% of its C-wave. A price in the neighborhood of $1520 would make a 38.2% retracement. The 50% retracement level, should this correction decide it needs to make the minimal historic retracement, comes in at $1395.

Will gold make it low enough to break its trend line? Worse yet, will it make it to the 50% retracement?

Beats me. I sure hope not!

In any event, I am absolutely NOT selling any of my mining positions for a loss. Period. I learned a very good lesson in 2008 and plan to make it pay me back this time.

Best wishes for your success, always.

And now, those C-wave trend line charts.

Click on any chart to ENLARGE

Related Tickers: SPDR Gold Trust (NYSEARCA:GLD), Sprott Physical Gold Trust (NYSEARCA:PHYS),  iShares Gold Trust (NYSEARCA:IAU), PowerShares DB Gold Double Short ETN (NYSEARCA:DZZ), iShares Silver Trust (NYSEARCA:SLV).

Written By John Townsend From The TSI Trader

The TSI Trader offers technical analysis of the stock market, gold and selectedmining stocks using the True Strength Index (TSI). The True Strength Index is a sophisticated ‘low-lag time’ momentum indicator. Projected earnings of mining company stocks are provided weekly by Bill Matlack’s Metals & Mining Analysts’ Ratings & Estimates report published at Kitco and are used to highlight some mining stocks for study.

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