We Seem To Have An Answer
By
Avi Gilburt
For many months now, I have been questioning whether the metals were actually going to get a lower low. The double bottom we got many months ago, followed by a 5-wave structure is what clouded the answer to that question. And, today, I believe we are getting an answer in silver and gold and it seems to be affirmative.
Let’s start with silver. With this decline, I think it makes this the grey c-wave pointing us towards the 53.50 region to most likely scenario in my mind. Also, I have added the micro count along with a resistance box for the series of 4’s and 5’s I still think we need. The first is a iv of (iii) of the 5th wave down. As long as the next bounce is corrective and holds that resistance, then I will continue to look down to the ideal target region. And, I will adjust the resistance box based upon the actual low we strike in this segment of the decline, as it does not look done as I am writing this update.
As far as the red count, I see that as much less likely due to the proportions we are seeing between the a-wave and c-wave at this time. In fact, I am strongly considering taking it off the chart. But, I am going to leave it and watch carefully to see if we get one more additional 4-5 after this decline completes on the 5-minute chart.
Also, I am keeping the green b-wave on the chart as a potential expanded b-wave in the larger (b) wave in case this does not complete the count as shown and breaks through resistance sooner rather than later. Moreover, should the next rally take shape as a 5-wave structure, we will be left with the green b and the yellow wave (5).
With regard to the MACD on the 144-minute chart, I believe the 4th and 5th waves that I have outlined on the smaller degree wave count should provide to us the positive divergence we want to see from this indicator as we are bottoming with the count completing. So, we will be watching that as well.
I also want to remind you of something I said regarding silver earlier this year. For those that have been with us for a decade or more, you likely remember my strong position that anyone who buys silver under $20 will likely be a happy investor in the future. Earlier this year, I modified that to anyone who buys silver under $60 will likely be a happy investor in the future. And, I am reiterating that again. While there is potential for silver to drop as deep as the $40 region in the coming years, I still view this as a tremendous long-term buying opportunity for long term investors who want to add to their silver holdings.
Moving to GDX, the market is following the ideal structure for the deeper wave (2). Thus far, we reached the .618 retracement of wave (1), and we seem to be trying to complete the 5-wave structure for the wave (v) of the c-wave of (2). I have added a resistance box on the 8-minute chart for the applicable wave iv. And, as long as that is respected, I expect one more lower low to complete this wave v of (v) of c of (2). And, yes, I view that as another buying opportunity should we fill this structure in as drawn.
As far as the yellow count, I see that as much less likely unless we see some ridiculous extension in the coming days. For now, the wave (2) still seems to be the most likely scenario, especially as long as we remain over the 77 region and the .764 retracement region of wave (1).
As far as gold is concerned, I am simply going to apply the same micro count noted in silver, which still projects to lower lows in gold over the coming days. As with silver, I am unsure how much more of an extension we have in wave iii of (iii), but we will adjust should it extend further. Just recognize that as long as we are below the resistance box on the 13-minute chart, this likely subdivides lower.
Overall, I still think there is some unfinished downside business and a few squiggles left to this decline. And, should GDX complete the decline as shown, I would view that as another good opportunity to add positions, and use a stop around 77. This does look like it is finally completing a nice a-b-c structure in GDX and a lower low in silver and gold.
Lastly, as far as the protective puts I suggested in the trading room last week into the bounce we saw, I will likely sell most of it as we complete the structure in GDX . . or break out through the resistance box in impulsive fashion.
