I've been asked many times if I think this C wave will be the last run for gold. The final parabolic blow off top. The leg to take us to the Dow:gold ratio of 1.
Nothing of course is written in stone but I tend to think we will see at least one more C wave advance. For one the public still isn't in gold in any meaningful way yet. If this C wave is as big as I think it will be we should see the public start to come in close to the top.
Since the public almost never gets the timing right I expect at least one more severe D wave decline to wipe out all the late comers and any of the public unlucky enough to jump on near the top.
I would compare this to the crash of 98. Tech stocks recovered quickly soothing the pain of Joe Sixpack who was just starting to believe only to suffer the minor market crash as LTCM blew up.
We will probably see the same thing again with gold. Just as the public starts to get on board we'll see one more D wave.
Smart money will be gobbling up shares at the bottom of the next D wave, so much so we may not even have an A wave advance followed by a mild B wave decline. If gold recovers quickly the public may just become convinced they've spotted another "sure thing" and completely abort the B wave. We could go straight from a D wave decline into a final parabolic C wave advance.
Since the next major bottom for the dollar isn't due till 2012 and this will be the third major leg down for the buck I would look for a top in gold to coincide with that bottom in the dollar.
Most major bear markets unfold in three waves although they can surely last longer. The Nikkei has gone through multiple bear legs down in it's ongoing bear market.
So as of right now I think the most likely timing band for a final top in gold would be in early to mid 2012 that is unless Ben still hasn't learned his lesson and continues to run the printing presses. If that's the case we could easily see another 4 years of declining dollar and rising gold.
4 weeks ago