Short term gold plunge? What do you think of this Rosen article?

PreTurb

This article by Ronald Rosen presents an extremely bleak gold picture for the short term...

Rosen Article

What do you all think?

CaptHenway

In any area, there are some people who have a vested interest in driving that thing up, while there are other people who have a vested interest in driving that thing down. Objectivity goes out the window, and they will say whatever supports their interest.

Try to avoid such biased reports.

MOO

TD

jmski52

I don't see an article. I see a couple of charts that show breaks away from established trendlines without anything to back it up.

And, those breaks are assumed to be logarithmic. I don't get it, at all.

Maybe cohodk can put the charts into perspective, but I cannot.

derryb

Welcome the ups and downs. Strait up is not good. Strait up means dollars are completely worthless. With worthless dollars, what are you going to trade your gold for? Short term pull back is the nature of the current gold bull market. It is a healthy sign. Use it to your advantage.

jmski52

I'm not saying that the metals markets can't stagnate for a year before continuing up. Indeed, they might.

However, what I am saying is that his charts don't involve anything but conjecture, and his commentary to explain his conjecture is non-existant.

Maybe cohodk, or roadrunner, or Proof Collection can offer some insight, but I'm not seeing a thing in that guy's post - not up, not down, not sideways - nothing.

roadrunner

Rosen was one of the strong bull proponents on gold up until about 2-3 months ago, when he turned staunch bear for the shorter term. He still feels gold will hit $1600+ but not before washing out again near $600-$700 in the next 12 months. For some reason he has now completely focused on the Elliot Wave "rule" that corrections must be 3 legs...ABC. And he must have changed the way he counted what made up the ABC. It's certainly reasonable that the move from Mar-Nov 2008 was an ABC. It's also possible though not as likely that the move from Mar 2008 - Oct 2009 was the ABC (with the final C leg being a symmetrial triangle). Rosen is now hanging his hat on the fact that a C leg is still to come and we are in the rising B wave right now. One thorn in his argument is that the current leg has now exceeded the previous high by about 4%. That's not the norm with gold where a "corrective" leg breaks the all time high. He came out with his case not figuring gold would surpass $1033. So strike one. In reviewing the gold chart since 1975, no cycle high was exceeded by it's corrective leg. This would be a first. It's not impossible though. Rosen could be correct and John Nadler of Kitco would be agreeing with him.

Rosen's delta turning points have been a fairly decent tracker of gold for a few years now. During the run up from November to around early summer he was highlighting the tracking up of the higher lows and how well it reflected the same lows on the way down from March-Nov 2008. Those lower lows have only gotten more obvious and stronger. Strike two against Rosen.

Rosen's long term count chart has us now in the 4th wave of a 40 year cycle. Wave 1 peaked in 1980 at $875. Then wave 2 took a grueling 22 years to complete by 2002. How often do 2nd legs laster longer than all the other ones? Not impossible but certainly odd. Leg 1 is about 10 yrs, leg 2 at 22 yrs, leg 3 at 8 yrs, and now leg 4 at about 2-3 yrs. Clearly, this type of asymmetry is unlikely imo to support his theory. It would also imply that leg 5 to come has to be at least 8 years long when it arrives. And even with this pattern Rosen has violated a major EW rule that states wave 4 doesn't drop into the zone covered by wave 1. Strike 2-1/2.

In Rosen's theory he has to follow Elliot Wave rules which states that wave 4 cannot fall lower than wave #1. Well that means gold can't drop below the $850-$875 range of 1980 which lasted for a few months in 1980 if you count the 2nd rebound peak. So I don't see how Rosen now comes up with $600-$700 as the low when he is violating the same EW theory he rests his ABC case entirely on. Strike 2-3/4.

A move to over $1100 would take it to strike 3. But I am not ruling out the possibility of a drop back in a stiffer C leg. If one tosses out the pre-2001 data as irrelevant to the current 8 year run, then a move back down to the $600 range is possible per EW rules.

I wouldn't bet the farm on Rosen's analysis as he's about the only one in his camp that I can see. His theory has to support a stronger dollar for the next 12 months. In light of QE how can the FED/Treasury allow that to happen? How will the US Govt put up with this knowing that their debt load has to be paid back with stronger dollars? Sure, the dollar can get stronger with higher interest rates....how will that sit with everyone as 401K's tank again, defaults increase on about everything paid on time, etc.?

In any case I don't see Rosen's view being possible until after November. I think the metals will run up in that month. JS has been beating the drum on more dollar crisis coming starting in November. With all the headwinds against it, how will the dollar burst upwards short of a push over the cliff by a planned deleveraging event?

roadrunner

CaptHenway

"Past performance is no guarantee of diddly!"

moonshine

all interesting concepts -- that said .... today's world is not as it was in the past. We are in a whole new ballgame. I don't feel that past trends apply to future trends of the earth as it is today --- somewhat, yes -- but no, not really.

jmski52

I see the possibility of 3-yr T-Bill rate going to negative 1% as about equal to the possibility of it going to 3%.

We are still losing jobs at half a million per week. They want to make it sound as if slower bleeding is a good thing, but until that trend reverses and shows actual net job growth, it's probably not the brightest idea to increase rates.

Even after the economy starts to come back, the consumer probably isn't coming back like before.

It is most disturbing that Wall Street still seems to be running Washington DC and none of the causes for this economic derailment have been changed one iota. The accounting standards are now bogus, financial derivatives are still being created to benefit financial firms who make no bones about paying huge bonuses with taxpayer money, the unions were rewarded with taxpayer money when they should have gone down with the ship instead, and bondholders were dissed - in historical terms, it has been a huge violation of trust in the financial industry.

None of the problems have been fixed, while the patient is anemic and still bleeding. Which one of the government's many plans for our futures gives any of us more confidence?

RedHerring

<< <i>What do you think of this Rosen article? >>



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LMAO! In 2011 I'd believe it. It the next 12 months I won't!

roadrunner

Yeah, I could possibly see a gold shakeout around June-July of next year following a strong run into the spring. But by then the wave up since last Nov. would have been so large and long as to be hardly believeable as a B leg pullback towards an end goal of $600 gold.

In looking back at the waves from March to November to 2008 there is really no way to come up with a textbook EW analysis to call that 5 waves down and meet all the criteria. The 4th wave would always overlap the 1st wave OR the 3rd wave down would be the shortest of the down waves. The most likely wave pattern that applies is just a series of simple abc's as part of the larger ABC sequence. That would mean that the March-Nov pattern would be a simple 3-3-3 ABC pattern and a quite possibly fully completed in November. Strike 2-7/8.

roadrunner