Gold Market Update
Betwixt & Between
Clive Maund
September 27, 2004
We are getting ever closer to a big move - and the longer the
current limbo persists, the bigger the move is going to be. This
is because, even though the price of gold is not moving much,
the internal technical condition of the market is steadily changing,
investors and traders who are interested around these price levels
are taking positions, either long or short, and the winning camp
can be expected to hold their positions once breakout occurs,
fuelling the emerging trend. Of course, our viewpoint is that
the long-term trend is up, with an upside breakout considered
probable, unless and until the long-term uptrend fails.
Note that the dollar chart
shown above is a 1-year chart, as the 6-month chart does not
give sufficient perspective.
The current state of indecision
is not confined to the gold market, it is evident also in the
dollar itself, the broad stockmarket, and in various other markets.
One older and wiser Wall St veteran recently commented that he
had never seen such confusing indicators in his entire career,
and I know what he means. This confusion arises from various
sources; many market participants are awaiting the outcome of
the US elections, indicators are probably distorted and skewed
by the heavy manipulation occurring ahead of the elections, and
statistics are being massaged, an obvious example being the CPI
index.
I have received conflicting
prognoses from various Elliott wavers, with some totally bearish
on gold and silver and others bullish, the one thing both sides
have in common is that they are convinced that they are right.
I studied Elliott wave long enough to realize that if one of
them is convinced he's right, he's bluffing, not just to you
but himself. Wave counts are notoriously difficult at times,
and if you get the count wrong, you're scuppered. Having said
that I can see the point that the bearish wavers are making when
they refer to the April plunge in silver as being an impulse
wave, and the subsequent rally as a bear market rally. That decline
in April was ugly, very ugly, and such declines often, although
not always, kick off a bear market. The silver plunge did not,
however, break down below silver's long-term parabolic uptrend,
and nor did it put much of a dent in gold. The April silver plunge
is one of the main reasons I have been rather wary over the summer,
despite gold remaining in its uptrend. I do not like flip-flopping
one bit, and the fact that I have been obliged to sit on the
fence for a while is a reflection of the confused state of the
market - when it is possible to be clear and decisive, as it
has been with the oil market, that is the way I like to be.
While the outcome of the current
stalemate may not be at all clear, the parameters certainly are
- a gold breakout above the clear double-top at $430, should
trigger a pwerful rally and such a development will be a major
buy signal. Of course, those traders who wait for such a buy
signal will have to chase stock prices somewhat, but will be
buying with the assurance that an important new uptrend is very
probably underway. On the other hand, a break of the long-term
uptrend currently at $390 will be a sell signal, for all but
die-hard long-term investors. It does look likely that, along
with other markets, gold will stall for time ahead of the US
elections.
Sep 27, 2004
Clive Maund
Clive.Maund@t-online.de
Clive
Maund is an English technical analyst, holding a diploma from
the Society of Technical Analysts, Cambridge and living
in southern Bavaria, Germany where he trades US markets.
Visit his
subscription website at clivemaund.com.[You can subscribe
here].
No responsibility can be accepted for losses that may result
as a consequence of trading on the basis of this analysis.
Copyright
© 2003-2004 CliveMaund. All Rights Reserved.
321gold
Inc Miami USA
|
