Saturday, 27 August 2011

Gold - are we at Point Z already? P&F and daily charts look like silver

The charts of gold and silver in the last post showed some similarities over a period of a couple of years and my wondering whether the move in gold this August to next May could follow the move in silver August 2010 to May 2011 in a magnificent top.

The gold move has been more parabolic than the silver move was in the early stage of its rally from $18 to $50. The action in gold is a bit like the ending action in silver near $49 if you look at the daily and point and figure charts in gallery view.

Silver at $49.50 or so did a double top within about a week. The first top was on Sunday night followed by a $5 drop all of the next day to the mid-40s level. The next top was the next Sunday night followed by the $6 drop in 11 minutes and a follow through drop to $32. They are chronicled in other posts and charts on this blog.

If gold is at point Z, ie at the top like silver was near $50, then it has happened much faster in gold than it did in silver. Silver took 8 months to get to $50 while gold has topped at $1920 in as many weeks.

Pierre Lassonde says "September is always a good month for gold" inhis KWN interview and sees an attack on $2000 in September.

The alternative case would be an ABC type correction in gold (A-wave down already happened and we are in wave B up, then the C wave would be to follow) or we could double top at $1920 like silver did at $49.50 and have a crash and burn for a while in gold.

This could prepare for a credit crisis crash in all assets this autumn with gold to $1400 and silver to $20 or so and an Au:Ag ratio of 70:1.

The alternative scenarios are that gold is at an earlier stage in this move. Interestingly, the first correction in this move on the gold daily chart doesn't even show on the weekly chart. This second correction is obvious on the weekly chart, a bit like the Christmas 2010 correction in silver. In that case, gold could have much further to run.

There are limits to 'Visual Analysis' as James Dines describes 'Technical Analysis'. Gold looks overbought at $1900 so needed a pullback, if only for a few days or weeks.

I find this move to $1900+ a little scary. The gold price topped £1000 sterling during the GATA conference in London, when it also topped Jim Sinclair's $1650 too. Soon gold was at $1900 or £1130. Amazing. A bonfire of all the currencies, except gold. We are in deep crisis with 'new levels of government with whole new powers' sa quoted on Jim Puplava's show this week. Unfoirtunately those powerful people seem powerless to stop the wreckage of our lives. Or maybe they want it.

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