21 April 2008

Gold could go to 1200 before bull market correction

If his count holds we could see an attempt at 1000 before we see sub $750. FWIW.

Not something I plan to trade, but good food for thought.

Gold ($919oz)

In late Feb we talked about a "gaggle of ratios and measures in the
1015-40 region under most counts" and said "we suspect that's where it's
headed". On an accompanying chart we penciled in a move to those
targets, then major correction back towards 730.
That's been more or less on the money so far. A couple of weeks later
prices peaked at a high of 1030, then reversed down sharply, coming away
over 150oz to the recent low of 873.

Gold weekly: http://www.boomspeed.com/geoff/Gold/Gold080408W.gif

We quite like that count - however we're not necessarily expecting a
further drop towards 730 immediately. We like the 1030-873 drop as a five
wave sequence (first leg or "A wave" of an ABC correction), in which case
the current rebound is "B". Our suspicion is that B could take some time
to complete and may even retest 1000 again before any decline for C
commences. First minor resis 933, stronger resis 950-55 and 970, but 995
may even be in the equation.

Gold daily: http://www.boomspeed.com/geoff/Gold/Gold080408D.gif[/TXT]
Gold hourly: http://www.boomspeed.com/geoff/Gold/Gold080408H.gif

Why a substantial amount of time for B? several reasons. For one, we're
still seeing potential for further USD weakness - possibly substantial
weakness. We don't think the dollar has bottomed. For two, we're not 100%
confident we've got the right count. Any error could see Gold go stronger
again (see last chart at end of Silver comment) so we're in no great hurry
to get short.

Silver (18.02)

The comparison with Silver is interesting - it's another reason why we're
a little scared of being short in Gold.
In late Feb we concluded that Silver had subdivided bullishly up from the
Jun06 low and that prices were surging in "(iii) of 3" in that sequence.
That left us thinking about eventual targets around 27.50.

Following up that count, it looks open to suggest that (iii) of 3 peaked
at 21.25 in March, with the selloff from there counting as a (iv) of 3.
We're thinking that selloff is another example of a the so-called "rogue
fourth of the third" [(iv)=.618 x (iii)]! It didn't breach the overlap
point at 16.20, and while that level remains intact a return to strength
to new highs is arguably favored for (v) of 3.

Silver daily: http://www.boomspeed.com/geoff/Silver/Silver080408D.gif

Which begs the question, could Gold also be engaged in the "fourth of the
third" up from the Jun06 low?
The short answer is yes. The count would look something like this (shown
below). Note the orthodox ratio hit and channel pick-up near the recent
873 low. We could be heading for 1160 next under that count. hence our

Gold daily2: http://www.boomspeed.com/geoff/Gold/Gold080408D2.gif

Geoff Robson-Scott

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