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Gold: Buy Now Or Later?

By Dr. Arnout ter Schure Market OverviewAug 05, 2020 05:37PM ET
www.investing.com/analysis/gold-buy-now-or-later-200533125
Gold: Buy Now Or Later?
By Dr. Arnout ter Schure   |  Aug 05, 2020 05:37PM ET
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One must live under a rock to not know the precious metals have been on a bull run lately. Gold has now reached the psychologically important $2,000 level. Suffering from FOMO (Fear Of Missing Out)?

Should you, therefore, buy it now, or may be later?

A simple way to invest in gold is with the Exchange Traded Fund (ETF) called GLD (NYSE:GLD). So, let’s assess its price chart to answer the question more objectively.

Applying the Elliott Wave Principle (EWP) to this ETF, as well as several technical indicators, I find GLD is reaching maximum overbought levels. Also, it has surpassed, i.e., called “extended” in EWP terms, my
initial daily-forecasted upside targets (green boxes). That’s a sign of a bull market: upside surprises and downside disappoints. Some negative divergences (red dotted arrows) are creeping in, foretelling us of a
potential pullback before resuming higher considering the current strength. In EWP-terms, I would label the current advance as green wave-3, the pending pullback as wave-4, and then the next more significant rally as green wave-5. See figure 1 below.

Figure 1. GLD daily candlestick chart with EWP count.

As long as the green wave-4 pullback holds the $179 level on a closing basis, I anticipate GLD to reach $197.50-213.00 for wave-5. This price target zone is rather large at this moment because I do not know yet how low wave-4 will go, and how much wave-5 will extend. The 5th waves are often between 0.618 to 1.000x the length of wave-1. Once that upper target zone is reached, it should complete red wave-iii.

GLD should then experience another (larger) pullback, wave-iv, which will hold above the green wave-4 low at ideally around $185-188, before an even more significant 5th wave to new uptrend highs (think
mid to high $200s) should take place. Thus, based on the price charts, technical indicators, and EWP, it may be more advantageous to wait for the next pullback before entering GLD. As long as $179 holds, I expect higher prices.

Gold: Buy Now Or Later?
 

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Gold: Buy Now Or Later?

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Comments (5)
amir ditamo
amir ditamo Aug 05, 2020 10:54PM ET
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If stimulus is given, what happens to gold? Will it rise or fall?
Chris Garcia
Chris Garcia Aug 05, 2020 10:20PM ET
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Gold is going to $2500+ and Silver $50+ by the election. There is no time to wait. People need to get in NOW before we truly go to the MOON.
Adamo Nals
Adamo Nals Aug 05, 2020 10:20PM ET
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Correct spot on. There’s probably way more upside in silver only because it’s still 50% Low at 2008 2012 and 2014 highs. But they are both going to the moon with all the stimulus. You can bank on that. And not far off. Very soon
Gordan Flego
Gordan Flego Aug 05, 2020 10:20PM ET
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Agreed. My targets for gold 2600, silver 48. And this is with current market.
Dizzle TheRizzle
Dizzle TheRizzle Aug 05, 2020 9:07PM ET
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It makes sense and its lagging due to uncertainty with the stimulus package. $200 or $600 or 70% salary yadda yadda bs that continues. Once we know the metals will take their breath. Dr. Arnout How do you feel about far extended call options june 2022 maybe 250 in gld. A decent sized amount of open interest there. Also whats your website?
Dr. Arnout ter Schure
Dr. Arnout ter Schure Aug 05, 2020 9:07PM ET
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Hi Dizzle, i do not provide any buy/sell or trade recommendations because I am not a RIA. My website is intelligentinvesting.market
amir ditamo
amir ditamo Aug 05, 2020 8:02PM ET
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I have a buy at 2050. Gold is now 2035. Should i close my trade and take loss or wait?
Dr. Arnout ter Schure
Dr. Arnout ter Schure Aug 05, 2020 8:02PM ET
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Depends on your time frame and risk appetite, but my analyses shows gold should most likely move higher after a pullback. You can draw your own conclusions based on that info :-)
Kenny Mathew
Kenny Mathew Aug 05, 2020 5:57PM ET
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great analysis.
Dr. Arnout ter Schure
Dr. Arnout ter Schure Aug 05, 2020 5:57PM ET
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Thank you!! This is what i provide every day for my premium members!
 
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