Daily Chart

I had been trying to flesh out where the price decline would wind up and decided that our elliot wave count was useful if you accepted that 34¢ and not 36¢ was our peak value. The gap also required to be filled, and the count can be changed around effectively using 36¢ as a peak value, but the low does not correspond to this number. A denoument following the low of 22.5¢ at 20.5¢ makes sense from the point of view of a 38% retracement from a peak value of 34¢.

Its been a choppy ride, but the implication is that 61¢ is now our target high, but could go higher, given the aggressive participation in the gold markets. Great to see price rises so effectively take out the short sellers in the bullion markets, but it also says that sell-offs will be quite severe. There are still pretty massive downside risks in GBN.V stock here, but since the company announced that production is postponed to late 2010 and it resulted in a minimal decline, then we can assume that this is our bottom from a technical standpoint, and that we are about to work on a '3' up-wave.


http://stockcharts.com/h-sc/ui?s=GBN.V&p=D&yr=1&mn=6&dy=0&id=p80350452320&a=118725785&listNum=2

Gold Price Projections

The next rise in the gold price should take us to the inflation-adjusted high of 1980. This corresponds with 3X the low set in the 2008 correction of $681. Inflation has skewed the number by about 25% or so, not the massive multiples that people assume, anticipating inflation. The wave form multiple of the gold price bull should see 11X its inflation adjusted corrective low, which I assume is the 40-year average price.

In order to get there requires a wave multiple of 3X and then another up wave of 5X the subsequent low. So up to ~$2043, a 38% retracement to ~$1266/oz, a 16-month consolidation. If we don't get the up wave after the next correction due to a massive deflationary effect on all prices, then we could see gold trade between ~$1000 and ~$1266 for some years. I assume that will mean gold will adjust in its monetary price up to its real price in commodities. This will be exceptionally good for gold miners, but not necessarily bullion, because they will be able to mine gold conceivably for the next 10 years with their costs well below the price per oz. There is always the possiblity that a currency devaluation against gold will occur, this will change the dynamics of the forex and share valuations, but not necessarily where gold resides.

So basically, the gold price, despite its major advance had actually deteriorated under price fixing using derivatives for some 20 years and has only popped out from under this kind of dynamic recently by rallying past the 40-year average and staying above it. Now the real music begins.


https://www.golddrivers.com/alt/charts/web/monthly/GOLDHISTAV.gif


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