THE FOUR KEYS

I'm still sitting on the fence as to whether gold is stuck in a D-wave decline or whether this has been a very tricky midpoint consolidation. I will say the recent strength despite a strong dollar is very encouraging.

There are four important requirements that have to happen before we can say with a high degree of confidence that the C-wave is still in play.

The single most important is the dollar. We simply must see the intermediate dollar cycle top. No C-wave has been able to fight a rising dollar. The dollar is getting late enough in the intermediate cycle that it could put in a top at any time.

The next requirement is for gold to put in a right translated daily cycle. If this remains a D-wave then all daily cycles should be left translated. If gold can eclipse $1131 this week then we will have a right translated cycle and that shouldn't happen in a D-wave decline.

The next hurdle is the $1161 level has to be surpassed. Gold has to break the pattern of lower highs and lower lows. It will do that if gold can top $1161. That will also eliminate the December trough as the intermediate cycle low and move the phasing to February. That is very important as it will mean gold is on week 4 of the cycle instead of week 10. That would give gold 6 more weeks for the second leg to progress.

And finally we need the miners to start participating. If the HUI can cut through the 420 resistance level that will be a big step in the right direction. If miners can break out to new highs along with gold all resistance in the gold market will be out of the way and the path will be clear for the second leg of the C-wave to rack up another monster move.