C-WAVE OR D-WAVE
From the 2001 beginning of the great secular bull market in gold, price has followed a predictable ABCD wave pattern.
This pattern has since played out five times. And on each occasion the C-wave has provided a spectacular performance. Gold’s C-waves of 2002, 2005 and 2007 yielded brisk gains of 18, 61 and 41%, respectively.
Fast forward to our current C-wave (April 2009 – present) and we find ourselves in either a C-wave that has surprisingly underperformed expectations (topping in early December with a modest 19% gain), or one that has yet to show its awesome might.
The question now is whether gold is still consolidating within a C-wave advance or whether a D-wave has managed to take hold.
On one hand the C-wave never really generated the kind of excessive speculation we normally see at C-wave tops. The silver gold ratio never spiked, miners never even got to normal valuations much less expensive, which is what would be expected as gold fever hits hard at C-wave tops.
The massive year and a half consolidation only spawned a meager 190 point new high? That doesn’t sound like a C-wave top to me. We had the most powerful A-wave, along with the weakest B-wave of the entire bull market so far and all it could gain was 190 points above the old highs? Hard to believe.
Trillions and trillions of dollar printed and thrown at the market and all we got was 190 points? Again hard to believe.
We even have a broken trend line.
Which ever way gold breaks out of the box should tell us were we stand. I will say that if this is a D-wave we should be getting close to the bottom. I would expect a test of the 65 week moving average and the $1000 mark will probably be about it before the next A-wave gets underway.
Gary Savage
Gary Savage is currently retired and lives in Las Vegas. He is the author of the Smart Money Tracker, a financial blog with special emphasis on the gold secular bull market.
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