Gold Completes Initial ~6-Week Surge
Gold Completes Initial ~6-Week Surge;
Bitcoin Confirming Multi-Month Decline…
Currency Wars Rage On!
01/31/18 INSIIDE Track:
“Gold & Silver set another higher low in Dec. 2017, the latest phase of a 1 – 2 year bottoming process, following major cycle lows in late-2015 & secondary cycle lows in late-2016. Gold set this low above its mid-2017 low, reinforcing the ‘1-2’, ‘1-2’ nature of this wave structure in which Gold creates successive rallies & declines with each decline bottoming at a higher level.
The diagrams on page 6 illustrate what was projected for 2017 and what is now expected, after that 2017 outlook was fulfilled. This is just a very basic wave structure but serves to demonstrate why Gold has been projected to unfold in this slowly-developing advance… and how it fits into the bigger-picture expectations.
It also shows that Gold, as of mid-Dec. 2017, has entered the phase when its intervening pullbacks could be less intense and give way to new advances after shorter interludes. It also demonstrates why 2018 could be the year when Gold begins to wrestle back some of its anti-Dollar status from cryptocurrency like Bitcoin.
While not a perfect analogy or equation, try to envision the battle between the Dollar and its alternatives as a simple algebraic equation, in which both sides need to be equal. For this example, we will give the Dollar a value range of 5 – 10**. As a result, the product of its adversaries must also equal 5 – 10 (when they are multiplied together), depending on the Dollar’s trend. A powerful trend would be a 10, while a congested, slow-moving trend would be a 5… and so on…
In 2017, the Dollar initially declined into late-March as Gold began the year in a solid uptrend. At the end of March 2017, Gold had solid gains for the year while Bitcoin closed around its year-opening levels (resulting in little gain during the first quarter). The Dollar’s trend was about a 5, as was Gold’s. Bitcoin’s was a 1. (5 x 1 = 5)
After congesting into mid-May, the Dollar entered a more accelerated decline – lasting into late-Aug./early-Sept. At the same time, Bitcoin came alive and surged into late-Aug./early-Sept. – almost quintupling where it was in late-March.
The Dollar’s downtrend was a 10 and Bitcoin’s uptrend was a 10, leaving little room for Gold to rally. Consequently, Gold traded sideways from late-March into mid-August, before providing a brief spike high into early-Sept. It’s overall trend for the April – August period was about a 1. (10 x 1 = 10)
The Dollar bounced in Sept./Oct. & Gold pulled back as Bitcoin whipped sideways – all basically neutral. After the first week of November, the Dollar re-entered its downtrend and dropped into late-month – an estimated trend value of 5. At the same time, Bitcoin entered its parabolic advance – a clear 10. As a result, Gold wallowed – producing about a 0.5 trend value (10 x 0.5 = 5).
And that led into some key cycles in Gold & Bitcoin – ushering in a ‘changing of the guard’, at least on a multi-month basis…
Bitcoin completed its 4th consecutive advance (since early 2016) of equal duration – with each rally lasting exactly 5 months – as Gold was spiking to a new 2 – 3 month low and retesting its year-opening range on the heels of Gold stock cycles that bottomed on Dec. 4 – 15, 2017.
When the Dollar resumed its decline in mid-Dec., a drop that is still expected to last into May 2018, Gold was now the primary benefactor – surging into weekly & monthly cycles in late-Jan. 2018.
Bitcoin suffered a serious correction and entered what is likely to be a multi-month corrective phase. In this case, Gold was the 10 and Bitcoin was a 0.5, equaling the Dollar’s theoretical 5.
More importantly, this action ushered in the next phase of Gold’s developing ’C’ wave advance (a type of ’3’ wave that began in late-2016) and shifted it into a slightly higher gear.
The reason for lingering on the previous illustration is to drive home the point that 2018 is expected to be a much different year in which Gold feels more emboldened and battles cryptocurrency with a bit more ferocity than in 2017.
As Bitcoin was exhibiting signs of (at least) a 3 – 6 month bubble peaking in mid-Dec., Gold was poised to transition out of a 2-year bottoming process and enter a more deliberate uptrend.
That does not mean Gold will go straight up or that cryptos will immediately collapse, but rather that Gold is poised to experience more sustained advances – particularly when the Dollar is faltering – as Bitcoin, et al lose some of their luster and struggle more to sustain new advances.
From a monthly cycle basis, Gold could wait until [reserved for subscribers] before setting its peak for the year. The action of 1Q 2018 needs to validate that. In the interim, there is likely to be a lot of competing moves as intermediate cycles & trends unfold.
One of those is being validated as Gold fulfills the potential for a surge from early-Dec. into late-Jan. (cycle highs span mid-Jan – early-Feb.) and attacks its 1 – 2 month upside target at 1365.8/GCG & 1370.0/GCJ (the Sept. 2017 peak) – even as Silver has trouble exceeding its Oct. ‘17 high.
If Gold peaks between Jan. 22 – Feb. 2, it will perpetuate an 18 – 20 week low-high-high-(high) Cycle Progression as well as a 27 – 29 week high-low-low-low-low-(high) Cycle Progression AND a 55 – 59 week low-low-low-(high) Cycle Progression connecting lows in early-Nov. ’14, late-Nov./early-Dec. ’15, late-Dec. ’16 & projecting a high in mid-to-late-Jan. ’18.
In the meantime, Bitcoin set an initial low in mid-Jan. but remains weak and is poised to drop further after briefly rebounding about 50% (while testing 13,000) without even neutralizing its daily downtrend. That is bearish & exerting negative pressure, leading into early-Feb.
If it breaks below its initial, 2 – 4 week downside target (9,400 – 9,600), Bitcoin should drop to its previous high (~7,800) and could still ultimately head back to its ‘4th wave of lesser degree’ support around 5,500… allowing more ‘safe haven’ funds to flow into Gold. ~5,500 is also where monthly trend support comes into play. All of this reinforces that Gold is coming into its own in 2018.
6 – 12 month & 1 – 2 year traders & investors should be holding partial long positions in Silver from early-Jan. ’16. Use a weekly close below [reserved for subscribers]…
In Dec., traders could have entered new long positions in Gold at 1275.0/GCG down to 1247.0/GCG (avg. entry ~1261.0/GCG) and should roll into the April contract and now [reserved for subscribers].
The XAU – after fulfilling its intra-year outlook by declining into Dec. 2017 & holding extreme support – has precisely fulfilled analysis for a surge into late-Jan. and up to 92.87 – 93.06 (it just peaked at 92.94/XAU). That is expected to usher in a corrective phase with the next multi-month low expected in [reserved for subscribers]. 82.95 = initial support.”
Gold continues to battle cryptocurrency for anti-Dollar supremacy. Mid-Dec. 2017 ushered in a decisive shift in the latest phase of Currency Wars – as Gold fulfilled downside objectives and triggered new buy signals while Bitcoin signaled the culmination of a 3 – 6 month bubble that could trigger a drop back to ~5,500 (a loss of about 70% from its mid-Dec. peak). The Dollar is signaling an early-Feb. bounce that could add downside pressure to both of these ‘anti-Dollar’ instruments in the near-term.
After that, focus will intensify on critical cycles in Bitcoin & cryptocurrency – coming into play in [reserved for subscribers]. Gold & Dollar cycles concur.
See Weekly Re-Lay & INSIIDE Track for additional analysis and/or trading strategies.