Recent drop in gold

Recent drop in gold is not a trend breaker yet. We will watch this closely.

Click here  for Jim Sinclair’s thoughts on the recent correction (with a nice graph).

Here is another note from Jim Sinclair, the man who went through the 1970’s gold market:

Dear BT,

The popular delusion and madness of the crowd has driven markets forever.

Two weeks ago you could hardly find a gold bear.

Gold traded at $1224.10 in the cash market. Central banks on both sides were shocked.

Those that wanted to buy felt lost, and those that wanted to print more paper felt challenged.

MOPE came in from all corners.

China, talking their market interest yelled, “Gold Bubble.”

The classic MOPE was an article stating that since central banks had been buying gold, it has to be the top. That takes the cake in terms of whimsical imagination without historical precedent.

From a man that has seen what a gold top looks like, this is not it.

All of a sudden the black hats were chasing the gold hats. You should know how many times in the 70s, I watched as even the nearest and dearest went into totally disorganized retreat mode. I yelled charge, and looked behind me to see no one whatsoever.

It can get damn lonely out here. However, those that are right rarely have company.

How many times have we seen this in the gold market? What has it meant so far? It means nothing more now.

Gold is going through $1224 and $1278 on its way to $1650, which will occur on or before January 14th, 2011.

Armstrong disagrees, as he sees $5000 by June of 2011.

Alf’s prices are without time estimates.

Regards,
Jim

Side musing: Alf Fields has called for $10,000 at last check. If these men are calling for gold to at least double (if not quadruple) in less than 14 months, do you really think we will not see another leg down in the global financial collapse in 2010? Nothing is fixed. Expect more of the same.

Martin Armstrong-Alf Fields-Gold Predictions

Jim Sinclair gave a summary of the next move in gold and the USDollar. He agrees with Martin Armstrong and Alf Fields and others. Check out my blog roll for his website link. The bolded items are my comments.

Jim says that the bull gold market will be Alf Fields’ price in Martin Armstrong’s timing.

 

The punch line: gold will begin its third wave up in June. This wave will top at least $3500. Bolded items (and red updates) are groovygirl’s comments.

From Jim Sinclair Predictions:

1. Gold reacts as currency support for the dollar enters mid June to a slow decline (that is the official definition of a strong dollar policy, really). Gold is now trading as a secure currency, not a commodity. This is a completely different type of investor/investment.
2. End of 2nd week going into the beginning of the 3rd week of June Gold launches towards $1000 and this time through the neckline of the reverse head and shoulders formation. Update August 24, 2009…we are still going sideways, battling deflation, trend to change soon. Wait for it….wait for it. Update October 13, 2009…looks like gold is moving up along the trend line again. We will have to fall below $800 to break this trend upward. Conversely, the dollar index is moving downward, it will have to move above .86 to break the downward trendline.
3. Gold rises to $1224 where it hesitates. Update Dec 9, 2009: we are experiencing the hesitation, not a break in trend. Don’t panic.
4. The OTC derivative market takes on the dollar as short sellers into dollar support.
5. This OTC derivative currency short position builds.
6. It is the US dollar where Armstrong will get his WATERFALL. Martin has predicted a waterfall effect. This means a quick plunge, never to return. The US Dollar is soon to be toast. Get out NOW. This drop will be so quick, that you will not have time to move investments out of the dollar when it is clear you should do so. Especially, if all your assets are dominated in dollars. Update Dec. 9, 2009: John Williams of shadowstats.com is saying the same thing from another perspective when he predicts a hyperinflationary depression by 2015.
7. The main selling (for the dollar) takes place when Israel makes a major miscalculation. The timing for Israel is 2011. Update: October 13, 2009….we are experiencing extreme pressure on the dollar right now, but not a waterfall..yet until closer to 2015.
8. Hyperinflation is always and will continue to be a currency event. The government will continue to print money and a hyperinflationary depression will occur in the US. Timing for the start is 2011-2012. Update Dec. 9, 2009 John Williams is saying a start of the major decline in the dollar in 2012, but the extreme hyperinflationary period will be closer to 2015.
9. Hyperinflation will be a product of the upcoming massive OTC derivative short dollar raid.

Should I be correct in the gold price action going into late June, it will fit Armstrong’s criterion for a move to $5000.

Alf’s work permits an over-run of the gold price to $3500 in the major 3rd phase, indicating overruns into the major 5th. Translation….Martin is predicting a major move in gold to $5000. If he is correct, Alf Fields’ prediction of $10,000 per ounce before the bull market is over (during the 5th wave) is completely conceivable. Update October 13, 2009…we are firmly in gold’s 3rd wave and would have to break below $800 to break this trend. Update Dec. 9, 2009: continued confirmation of Martin’s timing (2015) and Alf’s numbers ($10,000).

Do not think you will make a huge ROI on gold and silver. Gold and silver will be so ridiculously high, because the dollar will be crushed, never to return to its value of  today. It will throw all the global fiat currencies of the world on edge.

 

The rules of investing are totally different from they have been the last 25 years. This is a world-wide currency crisis, a systematic breakdown. Your focus is to PRESERVE capital, especially if your investments are in USDollars. I can not stress this point enough.

Alf Fields on Gold Wave 3

As Alf Fields predicted last fall, $699 was the low. So, we are definately in the 3rd Elliott wave up to $3,500. It could be a few years before we get there. Time will tell. I publish this quote, so the large dips in gold don’t bother you. We would have to dip BELOW $700 to break this wave. (Update: November 13, 2009, we are still in wave 3, we now must fall below $730 to break the trend.) No margin, use dips to buy in, never sell. This is your insurance for currency crisis, deflation and hyperinflation. It covers everything. If you want to sell a portion of your gold during wave 4, that’s OK, but do not miss holding the majority of your savings in gold/silver during wave 5. Wave 5 will be quick in action.  If you think you might miss it, hold gold through the wave 4 decline. Wave 5 is the currency crisis, super-hyperinflation period.

Assuming that the $699 low on 23 October 2008 turns out to be the actual low point of the correction, and that remains to be proven, then we can conclude that we have seen the low point for Major TWO. That will allow us to update my original “back of the envelope” template to much higher levels, as follows:

Major ONE up from $256 to $1,015 (actually 4 times the $255 low);

 

Major TWO down from $1015 to $699, say $700 (a decline of 31%);

 

Major THREE up from $700 to $3,500 (a Fibonacci 5 times the $500 low);

 

Major FOUR down from $3,500 to $2,500 (a 29% decline);

 

Major FIVE up from $2,500 to $10,000 (also a 4 fold increase, same as ONE)