Those of you reading this analysis are among the few remaining investors with an interest in precious metals and their related mining companies. This two-year consolidation has made most lose interest after a blockbuster rally in early 2016. And, the recent market drop has now placed an exclamation point on the extent of disinterest, or even disgust, which has gripped those that have followed this complex.
But, fear not, as when it comes to metals, what goes down must come up. Well, not really “must,” but I strongly believe that once this 2nd wave runs its course over the coming weeks, we will see a significant move upward, similar to what we experienced in 2016.
As far as the overall expectations, nothing much has really changed since our last update. Whereas GLD still likely will see one more lower low before it completes its two years wave ii, there are a number of miner charts (GDX and NEM) that seem to need at least one more low, and potentially two more lower lows before they complete their respective 2nd waves. Yet, there are other miners which may have already bottomed, and may have begun their next rally phase, such as ABX. I have gone over these charts in great detail in the past several updates, so I really do not have to repeat it again.
However, what I want to highlight is that NEM seems to have begun that drop in the 5th wave of its c-wave, as it made lower lows when gold and GDX have not, at least not yet. Moreover, the next rally, which will likely be wave 4 of c in NEM will solidify the positive divergent set up that is trying to develop on the daily chart. Again, it will not likely be until we can confirm a bottom to wave iii and begin wave 4 that this set up will solidify. And, while it is certainly “possible” that this last drop will complete this wave ii for NEM, there is not a lot for me to hang my hat on with that potential, as I outlined last weekend.
As far as the GLD is concerned, the most bullish pattern which would have suggested the bottom is in for GLD has not seen the appropriate follow through. This still keeps me on target for looking for that 5th wave in the c-wave of wave ii, as presented in green. But, even if we do get that lower low, the positive divergence set up that the MACD is now providing us suggests that low may not last very long, and it may even simply be a spike low followed by a strong reversal.
Currently, the drop off this week’s high, after we struck resistance, is looking like an overlapping corrective structure. So, while some charts in this complex may see a lower low, gold may only see a b-wave pullback in a much larger a-b-c 4th wave structure. So, I would probably say that I am leaning to the structure presented in green as my primary micro-count presented on the 8-minute chart. But, overall, the market is doing what it needs to do to set up a strong bottoming scenario.
Silver is presenting similarly to gold, and can also be setting up for a rally to complete its respecting 4th wave in the c-wave. But, to be honest, it has more of a potential to see a lower low here as a potential extension to its wave iii, similar to what we are seeing in NEM and several other miners.
So, while I would love to suggest that the bottom is in for the complex, I really have no strong evidence that such is the case. Rather, the weight of evidence suggests that at least one more lower low is sitting out there for most of the charts we follow in this complex, with some miners potentially having struck their bottom and looking for confirmation of such.
But, again, I would like to reiterate that the charts are now setting up not only their Elliott Wave completion structures for their respective c-waves of this larger degree 2nd wave, but the technicals have begun to set themselves up for such potential bottoming as well. While I cannot say that I expect the resumption of the metals bull market to begin immediately, I clearly see signs that this two-year second wave is finally approaching its conclusion, but may still see a bit more downside before it is done. And, yes, if you did not catch that, I still believe this is a bull market which began at the end of 2015 and early 2016 in the metals complex, with this being a 2nd wave pullback nearing completion.
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