AU Editorial: The Glory of Gold

Gold attracts a disproportional level of interest. Gold and gold stocks weigh minutely on the market compared with, say, base metals. Part of my early morning routine is to check the overseas markets. Finding information on overnight gold movement is easy; finding commentary on, say, copper is tough.

Such is the fascination with gold that it often prompts commentators to become a little starry eyed when forecasting the future price. We see quite fantastic projections like US$2000 and US$10,000. All may well be potentially true, but taking advantage is in the timing.

Many years ago we heard projections like $US1000 and thought they were ludicrous. Perhaps such levels are a real prospect now and not just a miner talking up his book.

When might we see these kinds of numbers? Let’s take a look at the ProfitSource chart:

click here for more detail

This is a 60-week Elliott chart but you can lose a lot of money following a weekly chart. In my view its primary purpose is to provide the big picture.

You will note there are three Wave Five projections – one at about $840, the second at $940 and the third a tad under $1080. I will not put a wager on hitting these precise levels but they offer useful guidance.

Initial Wave Fives generally have a high probability of being met. The second one is less likely and the third even more unlikely – though I have seen it happen.

Note the Fibonacci time projections of 2010. Well I could grow a mo by then! But also note that Wave Four could take gold back to the mid 600s.

Don’t you just love technical analysis? Clear as mud. Actually it is telling us that the price of gold is going to go up and go down. And that is how we make money.

Enjoy the ride!

Tom Scollon
Chief Analyst
Trading Tutors Team