Charts on GLD, GDX, Silver, NEM & ABX: Is the Low In Yet for Gold?

Friday’s action in the metals market has certainly woken up bullish sentiment which has seemed dormant for quite some time.  But, rather than simply getting excited about positive price movements, I want to lay out for you what I see as the “potentially” good, the bad, and the ugly in the various charts I am tracking so that you can make your own decisions about where and when you want to be buying in this complex.

With the market being unable to build a 5-wave structure off the recent lows in many of the miners that were hit hard over the last few weeks, it has made it more likely that we have not yet struck the bottom just yet throughout the entire complex. And, while I understand this market has been extremely frustrating to those who are trying to set up for the long-term potential we see, please do not allow that frustration to cloud your judgement about this larger degree set up. 

Since we broke that 117.40 region, it has certainly been difficult for those who want to “believe” in a bullish market.  But, as I said when we broke 117.40, the 113 region would come into focus, which, if broken, would point us down to the 105-109 region. Unfortunately, the deeper pullback has certainly played out once we broke below 117.40.  And, since we broke below 117.40, many have asked me if anything has changed in my larger degree bullish expectations.  I can certainly understand why the question has been asked since I initially expected we could see the bigger breakout in 2018.   

But, as you can see from the attached daily chart in GLD, nothing changes the fact that the rally off the 2015 low in gold provided us with an impulsive 5-wave structure off a long-term bottoming structure.  Moreover, that last 5 waves in the c-wave into that low in 2015 completed as an ending diagonal.  And, when ending diagonal’s complete, the reversal is often quite strong, which is exactly what we experienced.  Therefore, there are numerous reasons as to why I think the “bear market” in metals ended at those lows, and a new bull market has begun.  And, yes, this is despite the fact that we have been languishing in a larger degree a-b-c structure for the 2nd wave pullback for the better part of the last two years.   

I also want to note that should we complete the yellow count as shown on this daily chart, we would have a textbook a-b-c flat.  But, since the a=c in that structure is in the 105 region, we must at least prepare mentally for a spike down to that region, which will undoubtedly make the market even more certain that the bear market is back, and we are about to break down below $1,000 in gold, yet again.

I think it would now be appropriate for me to remind you of what The Elliott Wave Principle states regarding the character of 2nd waves:

“Second waves often retrace so much of wave one that most of the profits gained up to that time are eroded away by the time it ends. . . At this point, investors are thoroughly convinced that the bear market is back to stay.”

Does this well describe our current state of affairs in the metals market?

So, while I am trying to be as patient as possible in allowing this larger degree 2nd wave to complete its last segment of the pullback, I am also very much on alert as to how the blue count may play out to break us out sooner than the yellow one would on the GLD chart.

Let’s take a look at the GLD chart at this time.   Thus far, we have seen two 5-wave structures off the lows in gold (which can be seen in the futures but not in GLD itself).  Normally, when the market provides us with an a-wave, it is most often a 3-wave event.  So, when we see a 5-wave event off the lows, we must take notice, even though it may only wind up being an a-wave.  And, when the market continued to rally into early this past week, I gave the market the opportunity to provide us with a continuation impulsive structure up to the 116 region. 

However, while the pullback on Thursday did not exactly invalidate a 5-wave structure in GLD off the recent lows, I can honestly say that it is VERY rare to see a 3rd wave in gold only attain a 1.382 extension, and then see a deep 4th wave which almost overlaps the first wave.  For this reason, I am not putting a lot of consideration into the rally off the recent lows in GLD being a 5-wave structure, as not only does it not fit a Fibonacci Pinball standard, it is not even in the ballpark of what gold does.

Rather, the other bullish potential I can find is as a 1-2, i-ii off the lows, since we had two 5-wave structures off the recent lows in gold.  And, I updated our members to this potential in the early hours of Friday morning.  But, as I noted, I don’t think this is the higher probability at this time, especially based upon the structure I am seeing in the rest of the market.  But, should we see the market rally strongly through the 116.50 region, as I noted last week, I would likely reconsider that potential, as it would point us up towards the 118-119 region for a wave iii of 3 off the lows.  Again, I want to reiterate that the market will have to prove this to me, as I don’t foresee this as the most likely outcome right now.  And, should this occur, we will likely retest the 116 region from above in a wave iv pullback, as shown on the 8-minute chart to allow investors to add to their long positions IF we do get that break out.

For now, as long as we hold over Thursday’s pullback low, my expectation is that we can challenge the 115-16 region for a wave 4 in this c-wave of wave ii in GLD.  But, that would mean that any further declines in GLD, no matter how scary, are STRONG buying opportunities, with a strong potential that you may not see such an opportunity again for the rest of your lifetime.

At the end of the day, the potential 1-2, i-ii structure possibility in the GLD is part of the possible “good” I can offer, while the opportunity to buy another drop is the really “good” I can offer.  But, that is all a matter of one’s perspective, as I will discuss further below.

When we review the ABX, we now have 3 waves up off the lows, and if it can consolidate one more time, and provide us with a higher move, we can make out 5 waves up off its recent lows.  While that alone does not confirm the bottom is in for ABX, it is sure an important step.  So, again, we have more potential “good” in the complex.

As I move over to silver, it too had a potential 5 wave structure off its recent lows, with the 4th wave presenting as a triangle.  But, again, for me to view that as other than an a-wave, we will need to break out over 15.05, with a full 5 wave structure off the recent bottoming pointing to AT LEAST the 15.70 region.  Without that occurring, this rally will only be a 3-wave 4th wave rally, leading to a lower low.  So, I can at least count silver in the “potential good” category.

While I really cannot describe the rest of the analysis as “ugly,” I certainly can classify it as short term “bad.”  But, if anyone is truly an opportunist at heart, you will likely look upon this as the “good” rather than anything negative.

Let’s take a look at the NEM chart to understand a bit more of what I am speaking about.  First, I want you to notice that the MACD has started to curl up on the daily chart.  This is the first signs of bottoming that we are now seeing in this chart.  Moreover, the bottoming of this drop provides us with a higher level in the MACD than that provided in the a-wave drop.  This is a textbook perspective as to what we want to see on a c-wave.  It means that the second wave of selling is not as strong as the initial wave of selling, and is strongly suggestive of a c-wave down, rather than a much more bearish 3rd wave down.  But, as I said, it is only the first sign of bottoming.

The ideal structure for this chart is still suggesting we can see a 5th wave down to complete wave 3 of the c-wave of ii.  As you can see, I am viewing this consolidation as simply the wave iv of wave 3.  But, I want to also highlight that this count can easily bottom at the next lows we strike down into our target box.  In fact, any drop down into the 26-29 region I view as a long term buying opportunity.  Of course, the market can extend even further than that, but the a=c in this wave ii is just north of the 26 region, and that is usually a VERY strong buying point in a pattern like this, especially with the MACD beginning to turn up here, and with it being right below the .618 retracement of all of wave i.  You can always place stops just below the 25.75 region in case this does extend much further, as the next lower such target would be in the 22.65 region. 

As far as the GDX is concerned, it seems somewhat tied to the hip of NEM at this time.  So, I am viewing it primarily in the same way, as needing another drop to complete its 3rd wave of its c-wave.  But, just like with NEM, there is potential that the next drop is the last. 

Lastly, as you may have read above, I have alluded to the “bad” not really being bad at all, if you are an opportunist.  You see, this pullback is a c-wave in a much larger degree wave 2nd wave.  And the fact that the market has dropped as deeply as it has can either be a point of frustration for you, or a huge opportunity.  Much depends on how you control your emotions and view the market.    

For those that are looking to buy physical metals, I would highly suggest you visit a site of one of our trusted members, Doug Eberhardt – http://buygoldandsilversafely.com/EWT

GLD 8min
GLD 8min
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GDX-8min
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GDXdaily
silverdaily
silverdaily
NEM
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ABX60-minute
ABX60-minute
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Avi Gilburt is founder of ElliottWaveTrader.net.