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November 10th, 2013: Important GLD (GOLD) Wave Count Update

Posted by pugsma on November 10, 2013

3:30 pm EST:  I decided this weekend it was time to take much longer term look at the Gold wave count.  Gold as been traded since 5000 years Before Christ (BC).   GLD as an EFT tracking Gold has been round only since late 2004.  For the past year, PUG SMA has been charting GLD using an E-wave count that labeled the September 2011 high of 185.85 a Primary 3 (P3) wave and the drop to 114.68 in June 2013 a Primary 4 (P4) wave.   PUG SMA has been forecasting one more Primary degree wave (P5) above 185.85 to complete this bull cycle in Gold (GLD).  I wanted to step back look at the context of that Gold (GLD) forecast by looking at Gold price over the past 100 years.

I found a nice 200 year chart of Gold prices from Mathew Boesler at Business Insider from April 2013 (see chart below).   Looking at the chart since the 1900 time period, Gold has been in a clear 5 wave advance.  Gold began the 1900’s round $20 per ounce and then jumped in price to $34 per ounce during the Great Depression of 1929 to 1935.  This fist wave up I’m calling Cycle 1 (C1).    Then for 35 years gold remained near flat at $34 per ounce into the year 1970, which I’m calling Cycle 1 (C2).   Then in 1970 the Gold price really got interesting as Gold sky-rocketed from $34 to $873  per ounce by 1980, which I’m calling Cycle 3 (C3).   For the next two decades from 1980 to 1999 Gold prices dropped from $873 to $255 per ounce, which I’m calling Cycle 4 (C4).   From 1999 until the September of 2011 Gold made a strong advance from $255 to $1920 per ounce, which I’m calling Cycle 5 (C5).

PUG Gold Historical Prices 1792 to 2013

So this brings us to the present time.  With Gold’s strong Cycle 5 advance from $255 to $1920, there has been a lot of public interest Gold over the past 13+ years.  So much so that many new Exchange Traded Funds (ETF), like GLD have come onto the market.   GLD began trading in late 2004 and does a decent job of tracking the Gold Spot price.  PUG SMA began tracking the GLD price movements with Elliott Wave technical analysis is early 2013.  At that time PUG SMA labeled 185.85 on GLD the top of P3 without showing a Cycle Wave context.   It’s clear to me now that Gold is in Cycle 5 (C5) wave.  Thus the GLD price of 185.85 set in Sept 2011 is either P3-C5 or all of P5-C5.   If it’s just P3-C5, then GLD will climb above 185.85 (Gold above $1920) in the coming P5-C5 wave.  If it’s the later case then GLD and Gold has topped a 100 year Super Cycle wave and is likely to continue correcting lower for a very long time (decades).

The key to figuring out which scenario is correct is in breaking down the Cycle 5 (C5) wave.  As with any 5-wave impulse, the price during a 4th wave pull-back can’t drop below the 1st wave high.   If we look at the Gold chart above, we can clearly see that for the scenario that $1920 was only P3-C5, the P1-C5 high in Gold was $1020 in March 2008.  So far during P4-C5 Gold has dropped to $1180 in June 2013.  Thus there has not been an overlap for P4 into P1, but it came very close in June 2013.  If Gold prices drop below $1020, then we can conclude that Gold has topped an impulsive 5-wave Super Cycle wave high of $1920 in November 2011 and Gold prices will continue to fall for decades to come in a Super Cycle corrective wave.

So what does this mean for GLD the charts that I have been tracking the past year.  I have had the March 2008 high of 100.44 clearly labeled as  P1 high since the beginning of charting GLD.  We now know that this 100.44 GLD level is P1-C5 of a Super Cycle wave advance.   Then there was P2-C5 correction down to 68.81 in Nov 2008.   From Nov 2008 to Sept 2011 GLD move higher in a 5-wave advance to 185.8, which is P3-C5.  Since Sept 2011 GLD has been in a strong corrective wave, hitting 114.68 in June 203.   This drop to 114.68 came very close to overlapping the P1-c5 high of 100.44, but it did not. So it’s still possible that GLD will make a new high above 185.85 in P5-C5 over the next few years (note I will maintain this as primary green count).  However, if GLD price drops below 100.44, then the P5-C5 top is in place at 185.85 (alternate red count).  See the GLD weekly chart below.

GLD Weekly  Chart (11-8-13):

PUG GLD weekly 11-10-13

So in the short-term we have a some key level to watch for the primary (green) versus alternate (red) counts.

The primary (green) count is that P4-C5 bottomed at 114.68, major [1]-P5 topped at 137.55 and major [2]-P5-C5 completed at 121.85.  The move up to from 121.85 to 131.44 was wave (1) of minor 1 of major [3].  The current correction down to 123.62 is wave (2) of minor 1, which was a 78% retrace of minor 1.  The next move should be a wave (3) up to 139.16, where (3)=1.62*(1) and minor 1 should reach the 143.5 resistance.  This primary count as labeled would become invalid on a move below 121.85 for wave (2) of minor 1.  However, if that happens it would be possible to keep the primary count valid down to 114.68 with a re-labeling of major [2]-P5.   So the we must first watch the 21.85 level and then the 114.68 level to keep this primary wave count valid.  And even if 114.68 fails, then the P4-C5 low could still be made below 114.68 as long as it above the P1-C5 level of 100.44.  So the point being that the primary count PUG SMA has been tracking still has several options to stay alive.  And as I’ve had a long-term policy with in terms of my E-wave work the past 4 years, I don’t drop the primary count until the final level has been in validated.

The alternate (red) count has the P5-C5 top at 185.85 in Sept 2011. This aggressive move lower in GLD prices the past two years is likely a Cycle A (CA) wave that should break below the critical 100.44 level.  The alternate (red) count is in wave minor 3 of major [5]-PC-CA.   Minor 2 of major [5] recently topped at 131.44 and minor 3 is underway headed for 106.01, where minor 3 = 1.62*minor 1.  Ultimately, PC should reach the 62% retrace area 99 to 76 area, shown on the weekly chart.  Short-term the invalidation levels to watch for the alternate (red) count are at 131.44 an then 137.55.

GLD 60-min chart (11-8-13):

PUG GLD 60-min 11-10-13

GLD 4-hr chart (11-8-13):

PUG GLD 4-hr 11-10-13

GLD daily chart (11-8-13):

PUG GLD daily 11-10-13

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