OEW has had the Gold market in a long term uptrend since 2001. And, we ‘re not expecting the bull market top until the year 2014. This coincides with the 13 year commodity bull market Secular cycle. We have been posting on this blog, from time to time, on both Gold and Silver. You can find these reports be using the “categories” search function and choosing ”selected charts”.
Currently the precious metals are entering a very interesting situation. After the last report Gold bottomed about one week later within the expected bottoming range. We labeled that low Major wave 4 of the current Primary V phase of the bull market. After that low Gold rallied about $270 to $1793. This ended Intermediate wave i of Major wave 5. For the past two months Gold has been correcting in an Intermediate wave ii downtrend. It has been a bit tricky determining the actual low since the correction has been quite complex. Nevertheless, the low has occurred, or will likely occur on the next pullback. Silver has the same exact count as Gold. And, should also end its downtrend shortly.
Notice how both Gold and Silver ended their respective Major wave 4 lows, in late December, at the normal oversold MACD condition for each metal. Also observe how Gold has remained nearly entirely above the MACD neutral line since 2001. With the exception of the 2008 mass liquidation, this is typical bull market activity.
The interesting situation, we noted earlier, is quite simple from an OEW perspective. Situations like this are rare but do arise from time to time in various markets. Since Gold and Silver are, and have been, in bull markets. The quantitative feature of OEW requires both of these metals to make new all time highs before this year ends. It’s that simple!
With Gold currently trading at $1660, a new high is only about 16% higher from current levels. Nothing out of the ordinary here. One good uptrend can accomplish that. For Silver, however, a new all time high will require a couple of really good uptrends. With Silver currently trading at $31.54, a new high would require a nearly 58% advance from current levels. Since there are only about 8 months left in the year this would be quite a move. And, we are expecting it.
We conclude by suggesting there is a high probability both Gold and Silver will make new all time highs before 2012 ends. Best to your trading/investing!
If you would like to follow the metals with us you can review the charts on page 7 using the following link: http://stockcharts.com/public/1269446/tenpp