My Path Forward In Metals
By
Avi Gilburt
For those that have followed my work in metals through the years, you would know that we have caught just about every major turn in the charts for many years. And, that is because we follow the structure of the market very closely, as well as apply the standards that have worked for us for the 14 years I have been publishing my metals analysis publicly.
Of late, I have been struggling with this action in gold, as while I have been expecting a correction since April, I have been seeking a standard 4th wave formation. Yet, thus far, that is not what we have seen. While there is still potential for this rally to be a b-wave within an expanded flat in GC/GLD, we need a 5-wave decline below 3515 to confirm that potential.
But, the other potential path would be classifying the consolidation as a w-x-y pattern, with the y-wave being a triangle. This had been mulling in my head for several weeks, and I only started discussing this last week. Yet, as I have said many times, I have only seen one w-x-y with a y-wave triangle ONCE in two decades. Needless to say, it is quite short of reliable and certainly not tradeable with a high probability. If you choose to be aggressively long, it is not something I would have advised as you did not have the strong probabilities on your side of the table, at least in my experienced and humble opinion.
So, when the market provides uncertainty, that is a time I usually will do nothing, ride what I have or sell into targets. While I took a shot with an SLV hedge attempt at the end of last week, I stopped out of that at the open on Monday, which I posted. But, for now, I am holding some GLD protective puts. But, may stop out of them if we see a sustained move through 3635 in GC.
As far as GC, there is still one more point within the 3680 region which can also represent the top of a b-wave, as that would be based upon a more standard (a)(b)(c) structure at an (a)=(c) point, which I have applied in yellow to the GC chart as an alternative.
But, please take note of the MACD on the 60-minute chart. Price has often struck a sizeable top when the resistance region was reached a 2nd time on a rally. And, not only are we hitting that now, but we are doing so with a clear negative divergence. This is another reason I am a bit wary of this price action right now and looking for a potential reversal.
Ultimately, we will need to see an impulsive move below 3515GC from where we currently reside to suggest that the c-wave down I would still prefer to see take hold. But, again, I want to stress that will have to be a clear 5-wave decline, or else I may have to begin to accept the w-x-y completion to the 4th wave, and view a corrective pullback as a wave 2 in the 5th wave already.
As far as silver is concerned, I have outlined this new view several times now, and discussed it in my video this morning to the full-time membership. It is similar to my perspective in gold, in that uncertainty makes me sit tight.
There is one other move I have made outside of stopping out of the SLV protective puts. While those of you that have followed me closely – especially in my live videos – know, I layered into SLV calls as we were bottoming in the pullback at the end of July. I have sold 40% of those for a very nice profit in this region due to the uncertainty. And, as I discussed in the live video today, I have 3 points at which I would buy back those positions. The first is if we do get that c-wave decline. I think that is obvious. However, if the market continues directly higher to between 42.75-44 as wave 1, then I would buy back those positions during a corrective wave 2 pullback. However, if the market continues through the 44 region and attacks the 46+ region for wave 3 of (3), then I would buy back those positions during the wave 4 of (3). While the first two scenarios would provide me with better pricing, the 3rd scenario would not. But, it would offer me a more reliable structure. But, remember, this is an aggressive position, so I need higher probabilities on my side of the table to buy and hold aggressive positions.
While GLD/GC does offer that w-x-y structure – even though it is exceptionally rare, I cannot say that I have even that in the GDX. So, I have been selling my holdings in mining stocks that have been hitting their targets in this rally. I fully expect to be able to re-allocate that cash to better opportunities when we get a 4th wave pullback in GDX. But, for now, as the uncertainty and risk has risen, I have chosen to raise cash for only the 2nd time since I bought these positions back in the last quarter of 2015.
So, I have now given you not only my perspective, but also how I am handling my own account during this uncertainty. As always, the market will usually resolve a region of uncertainty, and then we will have a high probability path to follow again. But, for now, uncertainty reigns, and I am approaching that uncertainty as I have presented above. Overall, I am raising some cash to take advantage of the next opportunity that arises.
