GOLD finishing Wave B, Wave C will drop to 1100 in years?

6 de fev. de 2020

Gold has failed to break above the 0.618 resistance line at 1587 since 8 January 2020. It tried a couple of times to go higher, but repetitively failed to stay above 1587. This paints a grim picture for the mid term prospect of gold, especially considering that US stock market is far from the end of its massive bullish trend. Even the dreaded corona virus is not enough to fuel the panic to drive gold significantly higher.


Looking at the big picture portrayed by weekly chart, the 0.618 Fibonacci retracement resistance line at 1587 and the 0.786 resistance at 1734 are very likely to be where the Wave B since November 2015 shall finish. Like I pointed out in previous articles, late 2020 to mid 2021 might be some bearish market for US stocks, so there is possibility for gold to eventually break above 1587 and stop near 1734 in one year. However, the big picture for gold in the next couple of years is mostly bearish, as the ruthlessly bullish stock market will send gold down to levels between 1000 and 1200. This Wave C of gold could only finish when the long term bullish trend for S&P500 and Nasdaq Composite finally ends, temporarily, in 2024 or 2025.

macrotrends.net/1378/dow-to-gold-ratio-100-year-historical-chart
The Dow to Gold ratio is nowhere near its top in 2000, therefore there is still a lot of space for US stocks to grow and for gold to drop. Actually, I think this time we might see Dow to Gold ratio break above its top of 2000, just in 2 to 4 years. Don't take me wrong, although I selected 'short' button when publishing this article, by no means you should short Gold. Shorting is, by its nature, always more risky than buying, because it involves borrowing and has theoretically unlimited risk. So when you see Gold drop, don't short, just buy things that are actually going up, such as Nasdaq stocks and ETFs. If you see stocks drop significantly, it's probably time to buy Gold again, but never short stocks.