So, clearly, all of this makes me scratch my head, as gold has been just meandering in the dumps. Is not gold supposed to serve as the protection from such sovereign events? Is not gold supposed to serve as protection from stock market crashes? Where have all the “safe haven” advocates gone? Why has gold not even been able to catch even a “dead-cat-bounce” bid?
And, ultimately, if all we are seeing are “dead-cat-bounces,” then one cannot view this market in a bullish sense. Rather, this is a bearish pattern as it currently stands. The clearest pattern being presented in this sense is seen in the ARCA:GLD chart. As long as the GLD remains below the 117.70 premarket high struck on June 18th, we are set up to see lower lows in this market in the very near term. The only question I have is whether all of wave ii in wave (3) down has completed, since it would be considered quite shallow if it has. Ideally, I would rather see an attempt at the market to re-test the 114-114.50 region in a wave ii, but if we should strongly break the 111.65, with follow through below 110.65, then I am looking for the heart of wave iii of (3) down to be in progress, with my next target being the 105 region. And, again, it would take a move through the 117.70 level to make me reconsider this perspective.
ARCA:GDX, too, has remained unusually weak during the past week. I was actually hoping for more of a corrective rally, but its weakness has been similar to the one seen in GLD. With 19.19 being the high seen on June 18th, that is our high water mark for the bearish case. As long as we remain below that level, the GDX is set up to target lower lows in the near term. And, as with the GLD, I would still like to see more of a corrective rally in the GDX; a break down below 17.80 opens the door to us being in the heart of the 3rd wave down to lower lows sooner than expected.
As for silver, while it is in a clear downtrend, there are several counts that can apply to this downtrend, as I noted last week. This makes it much less reliable to provide guidance with regard to specific levels of resistance. But, the clear initial level of resistance is 16.55, and as long as we remain below that level, we are set up to drop to our lower targets.
Now, this brings me to a point I have not made in quite some time. For several years, we have been focusing on our long term buying targets in the metals. And, as you know, I have had lower blue boxes on the GLD and silver charts. So, I think it is time to remind everyone again that my ideal target for the GLD is 98.50, and in silver it is 12.75.
Ultimately, if one is a longer term investor in this sector, one has to be preparing to make very long term purchases when we enter the target zones. And, while we still can see extreme extensions, which can take the GLD as far down as the 75 region, and silver as far down as the 10/11 region, once we move into our long term target zone, one should be looking to buy, even if lower levels will still be seen. The lower levels, if seen, are points at which one may consider adding to their positions. Once the market does begin the final run to lower lows, we can then determine how deep the extensions will take us. But, you still need to have your plan in place before we drop, as I can assure you it will be an extreme point in price, as well as emotion, within this market.