Fundamental and Technical Market Analysis
For All Markets: Stocks, Commodities, Currencies, Cryptocurrencies
Updated At Irregular Intervals
I would rather be prepared and wrong
than to be unprepared but right!
Current Commentary -- Where Are We Now?
Monday, September 4, 2017 9PM:
Gold Stock Rally - Part IX
The two charts below for HUI and XAU shows that gold stocks have indeed broken above their respective triangle upper resistance lines. There have been brief periods where the stocks have shown rather impressive strength. But unfortunately those rallies were very short lived and did not hold near their high prices.
Click charts to enlarge.
I am still leaning toward an A-B-C pattern up from December, 2016 lows as labeled in the HUI chart (XAU is exhibiting the same pattern.) The key levels to watch are HUI 239 and XAU 101. These are the 100% extensions mirroring the length of each "A" wave -- thus, length of C = length of A.
Gold's low in December, 2016 was 1123 and its "A" wave high was 1295. Gold's "B" wave low was 1200. So I would expect its "C" to reach (1295 - 1123) + 1200 = 1372.
The previous gold high set in July, 2016 was 1375 and our expectations for this "C" is only 1372. This looks ominously like a major resistance level that I am not yet convinced gold will be able to overcome.
Silver may be on an entirely different path. From the December, 2015 low (note 2015!) at 13.65 the rally to July 2016 at 21.13 constitutes its "A" wave. The pull back to July, 2017 could be silver's "B" wave. So the expected rally for its "C" should be (21.13 - 13.65) + 14.39 = 21.87.
The real kicker here is that I seriously doubt silver will be able to rally +22% in the same time that gold only needs to rally +3%!
Therefore, I will assume the silver chart is actually closer to that of gold. As such, the April, 2017 high 18.65 is probably the target to shoot for with silver. That is only 5% above current price, so it is definitely doable if gold can rally 3% to 1372.
I have my doubts about any longer-term rally unless gold can decisively break above 1375 and silver breaks above 18.65. Until then, I am only seeing the current rally as approaching a very strong and serious resistance at these levels. As I mention in my previous commentary, the remaining months of 2017 could be very weak for gold, silver, and stocks and that may be what is holding them back.
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