Gold Mania

The Sifu of Gold, Marc Faber said :

One year ago, on 20th August 2010, Marvin Clark wrote an article "will the price of Gold reach $5,000 ?"

He said, "the inflation-adjusted price today for gold is more than $2,200 an oz. There are models with gold reaching $5,000, $6,000 and $8,500 an oz. One outlier has gold pegged at $36,000 an oz."

Click 'Will Gold Reach $5,000' for the article that was published a year ago on 20th August 2010.




Yesterday he wrote another article "Gold still on its way to $5,000", 11 reasons were given on why gold would rise to $5,000. Click "Here" to read.




In my yesterday's post, I mentioned that 'I don't think it (the price) will crash down from here ($1,909 level)'. My statement was based on my wave count for gold as shown above. There may be a wave 4 correction but not a crash.

The current run-up is the wave 3 of major wave (III), the 3 of (III), that is why it is so dynamic. An expected pullback ( say to $1,600 ) as mentioned by Marc Faber will complete the wave 4 before the last euphoric wave 5 surge (Mania Phase) to complete the major wave (III) if there is no extension.

It is important to note that the major wave (II) side-way "Complex A-B-C-D-E" correction lasted 20 years (a shallow and long correction), by the 'Rule of Alternation', major wave (IV) is expected to be a "Simple 5-3-5 zig-zag A-B-C" correction (a sharp and short correction). Theoretically major wave (IV) can drop until the top of major wave (I) of around $850. If gold can really reach $5,000, a drop to $850 is a 83% decline, a worst case scenario.

This is highly possible if the major wave (IV) decline takes only 2 to 3 years to complete instead of the 20 years of major wave (II). It has to happen in this way if it is a Gold Mania.

This is only an academic exercise on my part, it is not a recommendation to short or to buy gold. Don't forget, I can be wrong. Please consult a gold investment expert before taking any position.


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