XAU refresher

Then – July 6th, 2014 – and now, as usual;

xau july 7 2014xau oct 31 2014

It is not quite there yet but nevertheless getting very close, just 7 points away! At the rate that it is dropping we could be there any day. We could go beyond 60, perhaps something like 45 or so but in the BIG PICTURE gold stocks are at a level where they might actually are becoming a buy for the first time in a long time. It stands to reason that if the stock market turns as a result of QE etc. being stopped, gold might paradoxically turn at roughly the same time. Here is the big picture again;

xau oct 31 2014 b

With the exception of 2001 and 2002 , gold stocks have not been this for a very long time. Moreover the C of the “flat” has done the requisite 5 waves (even though one could argue that we are only completing 3). In any event a rebound to about 110 ( the top of the triangle) is very probable. That could easily mean a doubling of bad gold stocks like ABX, shown below on a longer scale;

abx oct 31 2014

The 5th wave does not yet appear to be complete but somewhere here between C$13 and $5 this stock is going to be a buy of a lifetime (27 years). If wave 5 equals wave 1, a normal relationship when wave 3 is extended, the perfect target would be about $10 or so. Keep an eye on the Swiss referendum as that may provide a boost to gold/ gold stocks if passed at the end of next month.