Thursday, May 5, 2011

Gold Bottom Now In!

by Marco G.

Goombarh 58 - May 5, 2011
Good Afternoon,

It has been a very trying two weeks for investors, as the previous gains are evaporating. 
The good news is that the Goombarh believes the bottom for Gold is now in:

From my readings anyways, there are two confirming analysis of this bottom.  The first is the 61.8% pullback from the GLD peak, which the Gold price has just declined to.  Will this go further down?  I don't think so due to the fundamental strength of the market; remember the Central Bank of Mexico just bought 100 tons of Gold.

The second confirmation comes from my Elliott wave analysis, since the last bottom in Jan 2011.  Wave 1 went up from 128 to 141 a rise of 13 units.  Wave 2 declined 6 units to 135.  Wave 3 went up  18 units to 153.  Wave 4 is the present decline which should be a 38% to 50% loss of Wave 3 which works out to 7 to 9 units from 153, which is the range of 144 to 146.  As GLD has just reached 144, I am of the opinion that the bottom is now in.

As for Silver, it has been badly beaten up with 4 separate margin increases in COMEX for futures trading in the last 2 weeks.

On the SLV chart above, Silver has declined to the 38.2% level with strong support here.  Also the volume sales is not increasing, so the bottom may also be in for Silver.  Note that Silver equities (such as SLW) and the SIL ETF have not declined as much as the Silver price.  Again an instance of the strong underlying strength of the Silver market.

Attached also, is a more detailed analysis of Shanghai Index correlation to Gold prices, which I am submitting to Seeking Alpha for posting.

I could be wrong in this analysis, but I am betting on being right, and I am buying more Goldcorp warrants.

Until next time,
Marco G.


  1. Monday May 9, 2011

    Though it is not obvious, and perhaps not due to Shanghai, but the GLD seems to have bottomed with recovery started on Friday and continuing today.

    I hope the SPX continues its upmove, as the precious metals will move higher better together with the regular markets.

    I believe there is still one higher Gold peak before Summer!

    Marco G.

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