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January
23
2015

Elliott Wave analyst sees much higher gold and silver prices ahead
Lawrence Williams

Gold, silver and base metals too are set for major upturn this year, according to Elliott Wave analysts at Wavetrack International.

According to Peter Goodburn of Elliott wave analysts Wavetrack international, Friday's punch higher for many of the mining ETFs, indices and equities broke key overhead resistance levels that now confirms the November/December '14 lows as the finalising levels of the multi-year counter-trend declines that began from the 2008/09 and 2011 highs. This also confirms, reckons Goodburn, that gold and silver bullion have also ended major counter-trend declines that began from the highs in year-2011 at the Nov/Dec.'14 lows of 1131.85 and 14.51 respectively.

Goodburn illustrates his latest projections with a series of charts covering the GDX and XAU indices, the gold price and silver price and, with relation to industrial metals, charts for copper and the BHP Billiton stock price. The gold and silver price chart are shown below as examples, but the others tend to illustrate similar trends – and in the case of the stock indices perhaps an even more exaggerated price reversal from recent lows.

In earlier forecasts for gold and silver miners, Wavetrack's analysis was well on target. For example, Newmont Mining was forecast lower, towards 18.07 with the mid-December '14 low recording a low at 17.60 and Wavetrack feels that among the gold mining majors Newmont in particular is due for a major increase probably comfortably outperforming metal price trends – as is the nature with the equities which tend to offer more leverage on the upside. Wavetrack thus reckons that a major directional change has occurred for gold stocks, confirming a new multi-year bull market uptrend has begun.

Gold bullion itself is still seen as in its early stages of upward development and although the analysts anticipate an upside test towards the old but key resistance level of $1525 in the months ahead, there is likely to be some shorter-term resistance overhead now that prices have traded above $1300. We have already seen a so-far relatively minor correction.

The silver chart above shows increased volatility over and above that of gold as is much as we would expects of the second precious metal in a bull market. It was already seen as ending its entire counter-trend decline that began from $49.91 in April 2011 and bottomed last December at $14.51. The upturn was confirmed by its price movement the morning after the Swiss referendum result. But recent action has distilled this bullish forecast with the early stages of a multi-year uptrend underway, again with forecasts into new record highs.

Wavetrack's analysis of base metals trends is also extremely interesting given that Dr. Copper has been seen by many analysts as being particularly weak given, in particular, the assumed downturn in demand from top consumer, China. But the latter has perhaps moved the goalposts here with the announcement of huge high speed rail and power supply infrastructure programmes which would be enormous consumers of copper and aluminium in particular.

Copper did make headline news last week with prices plunging into a new 5-year low, but in doing so, key downside levels which Wavetrack forecast last year have now been tested towards $5575/tonne, perhaps with a little room to do a fraction more towards $5090 if needed. But the key message on the Elliott wave analysis charts is that base metals are hot on the tracks of the precious metals sector in confirming a reversal of trend

As go the industrial metals prices, so will go major diversified miner stocks. Throughout last year, Wavetrack had forecast a large percentage decline for BHP Billiton for example, upon the ongoing development of a counter-trend zig zag pattern that was pulling prices lower from the April '11 high. Prices were hit during the last several months, dropping by over 40% per cent from the July '14 reaction high. A low traded last week but suggestions that the big iron ore price decline had run its course and again that the Chinese infrastructure programme could arrest the fall in copper, have seen the commencement of a recovery which Wavetrack reckons will be extended. Given BHP's exposure to oil and gas prices the other diversified miners not involved in this sector may see even better performances ahead.

For more details, Wavetrack International may be contacted by email at [email protected] or a message may be sent using the 'Help-Desk' in the top of the www.wavetrack.com website.


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