Market Timing Report - Silver
This commentary is a SILVERAXIS exclusive.
Elliott Waver Alistair Gilbert has taken a shot at predicting the zigs and zags of silver over the next year with his Market Timing Report - Silver:
This a brief follow up to my Report of 13th January advising a SELL of Silver at $18.52. Silver has since been sold down to $14.62 in Wave 3 of 1 of C of Major Wave 2.
In Wave 4 of 1 we can expect to see typically a retracement of Wave 3 of between 38.2% to 50%. This would give us a target of $16.25 for the 38.2% and $16.75 for a 50% retracement. Obviously the wave 4 retracement can halt anywhere between those two targets and given the pressure to the downside in wave 5 may even fall a bit short.
This is somewhat consistent with my thinking insofar as we should get a relief rally in silver back toward the $16.75 area.
Moving on to the big picture, my weekly DT chart shows how Major Wave 1 topped in March 2008 and we moved down for an “A” wave into October 2008 and up for a “B” wave into December 2009. We are now heading down in the “C” wave which should last until January 2011, and this would complete Major Wave 2. The 3 waves of (C) illustrated are 3 of 1 of (C).
This is the part that most “Wavers” seem so intent to be warning us about, that gold and silver will decline into late this year or early next in a “C” wave of a Major Wave 2 or 3 or 4. I don’t know if these wave counts are being derived purely from an unjaundiced technical look at the charts or as an adjunct to the general sense by the Elliott Waving universe that the world is about to accelerate its depressionary downward spiral. In any case, it is certainly something to be aware of, but unless someone can convincingly show me that Elliott Waves predicted silver would drop to $8 in the fall of 2008, I’m not going to be giving much shrift to this kind of preconceived market “analysis”. Not to toot my own horn, but to my knowledge I was the only one to have publicly predicted a massive drop in a metal (okay, it was copper not gold or silver), developed a strategy to take advantage of it, and ate his/her own medicine (along with a fortunate few SILVERAXIS readers).
Ok, to keep it simple, this EWT wave count (wave C of A-B-C correction) would project a target of Ag hitting around or below $7 / oz. The author does not provide a target but using EWT guidelines, if the net of ‘C’ = that of ‘A’ (which was the distance from $21.35 to $8.50) for almost 13 points, then subtract 13 pts from the top of wave B (19.45). There are different fib ratios for C, but in a typical A-B-C correction, (where B fails to take out the high), A & C are often the same lengths. Wave C can also be a multiple of A (1.236, 1.382, 1.5, 1.618 etc), or a smaller ratio, but more often then naught, A = C, so do you believe we will really trade below $7 / oz?
Steve Hochberg another EWT guru expects similar slide in Silver and below $650 in Gold. One of the (fundametnal) reasons is the deflationary spiral, Gold @ 1100 / oz and 75 oil is not telling me we are in a deflationary spiral, one other reason is the non confirmation of Silver surpassing its 1980 mark of $50 whereas Gold has already up-ended its 1980 record by nearly 50%. This presents a problem and does make the gold bull suspect. The answer for this is Silver is NOT yet in a bull market, contrary to just about everbody’s belief Silver is in a secular bull market it is not, it is still consolidating historical pattern and is only now in the final turning point, 12.50 may be the maximum downside target but I expect 13.50 to 14.00 before we see a reversal. Once this low is in, Silver will then move back up above 19.50, through the 21.35 and then when it takes out 25, for the first time since 1970’s, Silver will officially be in a secular bull.
Awesome additional explanation, 100orbust, thank you very much!