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Weak

What's Ahead For Gold In 2014?

Today, I'm going to analyze the gold market and in particular the spot gold market, which really drives everything in gold trading.

In 2013, gold turned out to be a real loser for the gold bulls, dropping some 20+ percent on the year and the year is not over with. While equities soared, the gold markets swooned and didn't receive any love from anyone. In fact, many of the big players like Soros, John Paulson and other large hedge fund managers began dumping their GLD ETF holdings just recently, as they too have had enough of the yellow metal's antics. All of this weighed heavily on the price of gold.


Looking on the chart at (1), the RSI indicator moved above the mid-line at 50 back in December of 2008, indicating a change in trend to the upside. A month earlier, the green weekly Trade Triangle had kicked in, indicating that the trend was indeed turning up. Once over the RSI mid-line at 50, gold prices steadily increased for the next several years, and hit an all-time high of $1855.15 on September 4th of 2011. For those of you who were following gold at that time, practically everyone was calling for a move to the $2000 level. In retrospect, too many investors were long gold and of course the fabled $2,000 was never seen.

At (4) on the chart, the RSI indicator moved below the 50 mid-line, pushing the gold market into a bear trend. At the same time, the 50-month long term trend line was broken to the downside. On December 18th of 2012, MarketClub’s red monthly Trade Triangle kicked in, indicating that the longer term trend for gold was negative.

——————
BLACK NUMBERS
1.Spot Gold moves above the 50 mid-line
2.50-month long term trend line
3.All-time high of $1,855.15
4.Spot Gold moves below the 50 mid-line and breaks below the long term trend line

RED NUMBERS
5. Elliot Wave count points to a move to $1,160
——————

On the chart you will also see a series of red numbers. These numbers signify a potential Elliott Wave count to the downside. I believe we've already seen the third wave, from $1800 down to $1200. The countertrend wave from (3) to (4), which was approximately a $200 move, indicates that the current move should be wave 5 and push gold prices below the $1200 level on a weekly closing basis.

To summarize, I expect the current trend in gold to continue right now. Our long-term monthly Trade Triangle, which has been negative on gold since $1672.40, remains intact at this time. I believe that gold is not out of the woods yet and has a great deal of work to do before it can resurrect itself in the eyes of most investors and gold bulls.

If I am correct in my analysis, we could potentially see gold move down to $1160 an ounce based on a Fibonacci count. There is also a strong possibility that gold will find an equilibrium some time in the first half of 2014.

As always, we welcome your comments and feedback on this analysis. Tell us what you think of gold and leave a comment.

Every Success,

Adam Hewison
President, INO.com
Co-Creator, MarketClub

Comments

  1. Bippin says:

    Dear Sir, I believe two time it has touched 1210 & bounce back strongly. Hence 1210 is a strong support & beyond that Top & two shoulder are created hence I believe bounce back to continue till 1261-1292 level. Please reply.
    Bippin

  2. AMeshiea says:

    A very interesting melding of EW and RSI. One thing though. Strictly speaking a wave 2 (down) is not supposed to be higher in price than the initial wave 1 start. The September 2012 high (your wave 2 end) was 1795.8. The Feb 2012 high (your wave 1 start) was 1790.55.

    I agree that we are in the wave 4 (albeit a different starting point for this wave C than yours). However i do not think that the wave 4 is complete. We may go to around 1200 level first but we should see a counter trend rally to 1300-1400 area before we get our final wave 5 IMHO.

    GL&GT

    • Adam Hewison says:

      AMeshiea,

      Thank you for your feedback and sharing your interpretation of Elliott wave. Either way, it is going to be an interesting market for gold in the coming months. 2014 looks to be potentially a turnaround year for gold, but it's way too early to say. We will certainly rely on our Trade Triangles to get that right for us.

      Once again thank you for taking the time to contribute to this blog, much appreciated.

      Cheers,

      Adam Hewison
      President, INO.com
      Co-Founder of MarketClub.com

  3. BK says:

    Adam,

    I was interested in a trade triangle subscription to only your gold and oil trade triangle signals. Your customer service dept never got back to me despite repeated emails from my side.

    Is this something that can be tailored?

    • Jeremy Lutz says:

      Hi BK,

      At the present time we only offer a full subscription to MarketClub. We do not offer just a Gold and Oil sub.

      Cheers,
      Jeremy

    • Adam Hewison says:

      BK,

      Wow, I am sorry to hear that, that is very unusual. Not sure what happened, but I'll look into it for you and will have Melissa who is our head of customer service get back to you. Here is Melissa's direct email:melissa@ino.com and you can reach Melissa at 800-538-7424 x 106. We have great customer support at MarketClub, so I do apologize for and problems that you might have had.

      Thank you for taking the time to bring this to my attention.

      All the best,

      Adam Hewison
      President, INO.com
      Co-Founder of MarketClub.com

  4. Steve Starr says:

    Agreed gold will continue to be driven lower by unrestrained naked short sales sponsored by the Fed/Treasury Dept and carried out via the big bullion banks, which can knock the price down, then take possession via GLD and turn around and sell the physical metal at a premium in overseas markets. Plenty of interested buyers to the East these days, they are amassing huge quantities to backstop coming gold-backed securities, letters of trade, and currencies, which will be used to replace the US dollar as the global reserve currency.

    Average into this market by taking possession at prices which now are markedly below what they would be had not regulators stopped regulating. Don't store your precious metals in safe deposit boxes, as the "Patriot Act" allows confiscation if located there. A global reset is coming this way and fiat currency, or US denominated debt is no protection.

  5. Ian says:

    "gold will find an equilibrium some time in the first half of 2014."

    What does that mean?

  6. david whitney says:

    Agree that gold equilibrium will occur as physical world demand will be good.Prices are good for some physical buying with long term holding for insurance against negative interest rates and stealth inflation.

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