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Volatility Ahead Prior to Explosive Move Higher

volatility

Nothing is guaranteed, but when extremes and divergences are crystal clear across multiple tools, you can have a high degree of success in picking peaks and troughs, such as the bottom in Gold in October and the peak on Monday. This is what my FIPEST process is all about. Whereas trying to determine the next direction in between such extremes is more difficult, with the aid of Elliott Waves, this is my expectation for Gold next.

Gold Price

Gold Price

Gold is wave (3) of 5 now. We just completed wave i at 2151 on Monday, and now we’re waiting for the bottom of wave ii. Corrections such as this are typically in three major waves: A down, B up, and then C down to complete wave ii.

Gold price chart

I believe wave A has completed at 2018. Next is wave B, which is somewhere between 2070-2100. From my perspective, it doesn’t really matter where B peaks because my focus is on the bottom in wave C or ii. Once we have the peak in B, I can provide specific targets on the downside. For now, somewhere between 2000 and the 200-day moving average around 1960 is a highly probable target. But depending on where B tops out, it could be lower.

The importance of the bottom in wave ii cannot be overstated because what follows is wave iii of (3), the money wave. The wave ii low is where I plan to load up. You don’t want to miss that train.

Silver Price

Silver price chart

The overall picture in Silver is more or less the same as that in Gold, unsurprisingly. Silver just completed its wave i at 26.34, and now it is heading down in wave ii.

Silver price chart

Silver has hit a low of 24.21. I’m not sure if Silver has bottomed in wave A yet, but if it hasn’t, there’s only a few pennies left on the downside. Next comes wave B up to a peak somewhere between 24.80-25.00, best guess. Once we have the actual peak in B, we can provide more concrete targets on the downside in C. Best guess right now is somewhere between 23-24, perhaps even a 22 handle, for the bottom in C / ii. Then get ready for liftoff, imho.

FUNDAMENTALS

There are several key data points in the next six days that could act as catalysts for the peak in B, drop in C, and blast off in iii of (3):

table

Anything significant from the FOMC will likely be in the conference call because there is a 99% probability that the Fed does not change interest rates next week:

Gold price chart

Going to be a volatile week or two prior to the takeoff in the metals. Fun times ahead.

Don’t miss a golden opportunity.

Now that you’ve gained a deeper understanding about gold, it’s time to browse our selection of gold bars, coins, or exclusive Sprott Gold wafers.

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About the Author

David Brady has worked for major banks and corporate multinationals in Europe and the U.S. He has close to thirty years of experience managing multi-billion dollar portfolios including foreign currency, cash, bonds, equities, and commodities. David is also a CFA charter holder since 2004.

Using his extensive experience, he developed his own process utilizing multiple tools such as fundamental analysis, inter-market analysis, positioning, Elliott Wave Theory, sentiment, classical technical analysis, and trends. This approach has improved his forecasting capability, especially when they all point in the same direction.

His track record in forecasting Gold and Silver prices since has made him one of the top analysts in the precious metals sector, widely followed on Twitter and a regular contributor to the Sprott Money Blog.

*The author is not affiliated with, endorsed or sponsored by Sprott Money Ltd. The views and opinions expressed in this material are those of the author or guest speaker, are subject to change and may not necessarily reflect the opinions of Sprott Money Ltd. Sprott Money does not guarantee the accuracy, completeness, timeliness and reliability of the information or any results from its use.

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