Asahi recently posted a story about Japanese pensioners who are selling their gold.  Remarkably the perception of gold has been quite a bit different in Japan than around the rest of the world.  The country as a whole has been a net exporter of gold since 2006 and according to the World Gold Council, Japan is the only major economy where the demand for gold is decreasing.

Many Japanese, who have become accustomed to their deflationary environment, view the recent high prices in gold as an opportunity to take profits.  What they fail to understand is that for a country like Japan, whose debt exceeds 200% of its GDP, deflation is only a temporary condition.  Whereas inflation (and hyperinflation) can reduce the real cost of a debt burden – and actually bring unsustainable debts back into the realm of manageability – deflation cannot.

At some point Japan will be forced to face the harsh reality that awaits every bankrupt country.  They will either have to openly default on their debt or radically revalue their currency lower.  Neither scenario will leave recent sellers of their gold very happy with their decision.

Interestingly enough, the article notes that the only group showing interest in owning gold are the retired  bureaucrats from the finance ministries and agencies.  They seem to grasp the unsustainable nature of the status quo.

The situation is the same in the United States where we have the added wrinkle of possessing (for now) the world’s reserve currency.  The highly complex machinations of the global finance systems can, in the short term, produce counterintuitive moves in which wealth seeks the dollar and treasuries over gold.  But this too is a temporary aberration.

The United States government is bankrupt and even a return to historically normal interest rates could render our debt obligations unserviceable.  No paper, be it currencies or debt, will be safe under those circumstances.  Only gold and silver will be left standing as the true stores of value.

I was interviewed on the Fox Business Channel regarding the Utah Legal Coin Act in early June 2011. Here is a little background and some interview questions. />   /> For the first time since 1971, gold and silver are once again considered legal tender in at least one part of the United States. The State of Utah passed the “Utah Legal Tender Act,” which “recognizes gold and silver coins that are issued by the federal government as legal tender in the state and exempts the exchange of the coins from certain types of state tax liability.” />   /> The law, signed by Governor Gary Herbert on March 25, is a voluntary system that provides an alternative to the fiat-based Federal Reserve notes that are created out of thin air in unprecedented proportions. />   /> The most significant change from a practical perspective is that the Utah’s state tax code now considers gold and silver coins issued by the U.S. Mint as currency rather than an asset, which means since it is considered money it cannot be taxed. However, federal taxes still apply on these transactions. />   /> The Utah Legal Tender Act (HB 317) is designed to reinstate gold and silver coin as an optional medium of exchange in Utah intrastate commerce. The bill recognizes the inherent and inalienable right of citizens to voluntarily employ these time-tested, inflation-proof, complementary currencies to foster economic development throughout the state. The bill draws its authority from Article 1, Section 10 of the United States Constitution which provides that no /> state shall make anything but gold and silver coin a tender for payment of debts. Grounded in long-standing principles enshrined in the supreme law of the land, this statute addresses current, pressing monetary issues in modern American society—issues to which gold and silver coin solutions are uniquely suited. />   /> Because the founders of our nation had experienced firsthand the ills attendant with unbacked fiat currency, they provided in Article 1, Section 10 of the United States Constitution that no state is to make anything but gold and silver coin tender for payment of debts. Unfortunately, we’ve departed from the wisdom they imparted, and embraced a medium of exchange that has no intrinsic value whatsoever. The value of today’s dollar is upheld by governmental edict, backed only by the indebtedness of our nation and its citizens. Because of sharp increases in our money supply, our national debt is on an upward trajectory, set shortly to eclipse our gross domestic product. Since there is no historical precedent for a totally fiat money system such as ours ever lasting more than a few decades, prudence dictates that alternative, sound means of exchange be put in place well in advance of any potential crises, such as those endured by the fiat-financed nations and empires of the recent and distant past. />   /> Even absent the specter of catastrophic consequences, an alternative sound money system confers many benefits on citizens and state governments alike. Such a system serves as a refuge from the ills that fiat money produces, including the insidious “inflation tax” that our current monetary system imposes. Consider that the U.S. dollar has lost more than 95% of its purchasing power since decoupling from gold and silver backing. By contrast, sound money systems of the past continued virtually inflation-proof for centuries on end. />   /> States that have tried in the past but failed to enact their measures />   /> Virginia House Joint Resolution 557 /> Georgia Constitutional Tender Act /> Ohio Honest Money Project /> Idaho Silver Gem Act, Bill No. 633 /> South Carolina House Bill No. 4501 /> Missouri House Bill No. 561 /> Washington House Joint Memorial 4010 /> Colorado Honest Money Act (HB09-1206) /> Indiana Senate Bill No. 453 /> Montana House Bill No. 639 /> New Hampshire Gold Money Bill 1.1. />   /> Because of the co-dependent relationship between Congress and the Federal Reserve, the likelihood of any sound money reform coming out of Washington DC is remote indeed. Individual states, exercising their sovereign authority, are best equipped to restore sound money to its prior status as a trading currency. So look for a sound money comeback on a state-by-state basis. It makes sense to first support states that are well positioned to make sound money a reality today. Then as the movement gains momentum, reluctant jurisdictions will see the advantages of embracing sound monetary systems. />   /> More information can be found at: www.utahsoundmoney.org. />   /> We have received feedback on this from many people so far and many are of the belief that Gresham’s Law (http://en.wikipedia.org/wiki/Gresham’s_law) will mean that no one will spend real money (gold or silver) into circulation. We will not argue with the concept but will make the case that the market will decide and perhaps there will be some who want to “spend” their profits into the community. For example, when silver was approaching the $50 level there could have been (in theory) people who wanted to take advantage of that price and spend some profits for some good or service. />   /> Also, we think that some merchants favorable to sound money principals might offer a discount for real money being used in a transaction. We can envision two prices — a silver price and a fiat price. Again, the market will decide and it is our hope that real money circulates enough to encourage other states to adopt such measures. We find it interesting that some of the opponents of the law come from the CPM Group: />   /> We, of course, side on the principle of sound money and think the U.S. has not instilled confidence for a very long time. I am scheduled to fly to Utah and be with Governor Gary R. Herbert for a ceremonial signing of this law. We again are hopeful that other states will follow and the principle of fair weights and measures will once again be restored to the people. />   /> Mexico at the National level />   /> Another aspect of putting silver into circulation is one that graced these pages many times, the proposal led by Hugo Salinas Price to reinstitute silver as money along side the peso. This of course implies silver being used again as an alternate means of payment at a national level. />   /> Mr. Price has written numerous articles about the possible return of silver money circulating along side the Mexican peso. Let me state that when we first put this into our report so many years ago we lost some very angry subscribers because “we” did not understand Gresham’s Law! Quite the contrary, but these quick-to- judge people would not take the time to read and understand the proposal in full. />   /> Again we are NOT suggesting that this will catch on right away but will more likely develop momentum over time. />   /> David Morgan

Chris Vermeulen – www.GoldAndOilGuy.com />   /> A few weeks ago I wrote about how gold was starting to top and that everyone should expect a very sharp drop to the low $1600 area. How I came to this conclusion was though the use of inter-market analysis combining price patterns, gold futures volume, the dollar index and market sentiment. This allowed me to understand what the majority of other traders/investors were thinking and feeling. By knowing each of these market variables and crowd behavior I can accurately see into the future a few days with a high probability of success and most importantly with low downside risk.

You can view part-1 on how I properly forecasted that gold would fall sharply in August here: http://www.thegoldandoilguy.com/articles/dollar%E2%80%99s-on-the-verge-of-a-relief-rally-look-out/

At the time when I forecasted gold to reach the low $1600 area gold was still building the top pattern so I could not say how long a recovering would likely take nor did I know exactly when to re-enter a long position. But now that we have seen how gold arrived at my target price I can form a new forecast.

Spot Gold Price Forecast – Daily Chart:

The gold chart below clearly shows rising volatility along with my topping pattern of three surges to new highs. It was August 31st when I warned subscribers and my followers that gold was about to top and that everyone should be taking profits or at least tightening their stops to lock in gains. Only three days later gold topped and it has not stopped falling since.

On August 8th gold had a large opening gap to the upside. This means the price opened the next day much higher from where it closed the previous session. It’s important to note that gaps especially for gold almost always get filled within a couple months. Seeing this gave me a solid reason to think that gold should pullback to this level during the next big correction in price.

Also during the month of August gold had to pullbacks only to continue to make the third and final high. This told me that when the top is put in place was a very high probability that we see the price of gold drop below both of Augusts’ lows and that would trigger stop orders sending the market sharply lower.

Now that we are seeing the stops being flushed out of the market it means the majority of speculative traders have exited their positions.  So speculative traders who caused the large surge in gold to take place are now out. Once all the speculative traders have exited which should take place in the coming weeks or two we can expect some type of bounce or rally. I will keep a close eye on the intraday charts for subscribers as we near a potentially major trade setup.

Where are we in this gold bull market?

Well I feel gold is more fairly priced between $1632- $1660 area. Currently gold is trading at $1660 but if things play out like I have seen in the past we just may get one more dip this week to the $1600 area before gold truly puts in a bottom.  Because gold went from a new high all the way down to Friday’s panic selling washout instead of a controlled ABC correction I feel a bottom will be more of a one day event. This type of bottom carries more risk and is more difficult to time and trade. So scaling in with a small position at this level and adding on a drop to $1630 then $1600 could prove to be the safest way into a gold position.

Forward looking I see gold bottoming over the next week or two then a nice relief rally to the $1775 area. Depending on how gold arrives there will alter my next gold forecast so let’s wait and see how things unfold.

Spot Silver Price Forecast – Weekly Chart:

Silver I call the Un-Safe haven because to me it’s not a safe haven in the way everyone’s believes it be. I hear and see everyone including friends and family selling all their stocks and putting their money into silver.  To me buying large amounts of silver with your retirement money is just ridiculous. I m sure my statement here will trigger an inbox of silver-perma-bulls (silver bugs) to send me hate mail but that’s fine as my assistant filters my emails so I don’t have to keep being reminded how rude some humans can be over an simple opinion…

Investments  that can lose 25% in value within 2 days or lose 40% of it’s value in 5 months should not be traded nor invested in with large portions of anyone’s life savings, especially if you are over the age of 50 and have not proven to be a constantly profitable trader. No one can stomach losing that much of their nest egg.

That being said I do feel silver is in a similar situation as gold. I do feel a bottom is near. Silver has formed an ABC correction and the price and volume patterns seem to be in line with a typical bottoming pattern. After Friday’s massive selloff I feel silver may slide a little lower yet before putting in a bottom.

One thing to keep in mind with silver is that it is very thinly traded; there are a lot of speculative traders involved which push and pull the price to extreme levels on a regular basis. So if the broad stock market continues to sell off sharply then I expect silver to follow suit.

Pre-Week Precious Metals Trend Analysis Trading Conclusion:

The price action we have seen this year for both gold and silver indicate were are just warming up for something really big to happen. It could be a massive parabolic rally to ridiculous new highs in 2012 or it could be a large unwinding of the safe havens as countries sort out their issues and the big money starts moving out of metals and into currencies and stocks.

Only time will tell and that is why I analyze the market multiple times per week to stay on top of both long term and short term trends. So if you want to keep up with current trends and trades for gold, silver, oil, bonds and the stocks market check out TGAOG at: http://www.thegoldandoilguy.com/trade-money-emotions.php

Chris Vermeulen

I can’t remember the last time I watched the local news. It’s probably been at least two decades – and for good reason. It tends to consist of people repeating information on topics that they have little inherent knowledge of. Take a look at the clip below in which the reporter attempts to explain the recent drop in the price of gold. She claims that people are starting to see the dollar as a safer investment than gold, as it is backed by the US Government and the Federal Reserve. She notes that gold, on the other hand, is backed by nothing. Is it any wonder that Americans are completely ignorant as to the true nature of money and our monetary system?

So, is this the same US Government whose debt is so large that even a moderate increase in interest rates would render that debt unserviceable?  Or a Federal Reserve whose chairman has promised to dilute the purchasing power of the dollar to stave off a recession? A recession that is desperately needed, by the way, as it represents a healthy, corrective process. How would this reporter back up her comments when presented with a chart showing a 98% decline in the purchasing power of the dollar since the Federal Reserve’s inception in 1913? Or the fact that gold has actually increased in purchasing power over that same period?

Here’s a concept that is completely alien to Americans: How about being able to successfully save for retirement without any investment risk, or even the need to earn interest? This is how it once worked before the government forbade gold’s use as money. What a pleasure it would be to know that your savings would actually purchase more in the future. How unthinkable is it that you didn’t even have to earn a return on your gold money as it wasn’t constantly losing its value each year? How nice would it be to avoid the casino-like atmosphere of the stock market and your 401k?

And when gold was money, you didn’t have to pay taxes on its retention of purchasing power. Whereas with the dollar, when you are successful enough in your investments to cancel out the loss of purchasing power that occurs as a result of inflation, you are required to give some back anyway in the form of taxes. Don’t expect to find any of this on your local news, however.

David A. Banister- www.MarketTrendForecast.com

I got a bit of hate e-mail over the last few weeks from the Gold Bugs who thought I didn’t know what I was talking about when I forecasted a multi-month consolidation and correction in Gold was imminent. I’ve written ad nauseum about crowd behavioral patterns as they related to both stock markets and precious metals.  It should not come as a surprise that Gold is continuing to drop after a 34 Fibonacci month rally from $681 to $1910 per ounce.  That rally came in five clear Elliott Waves and ended with a parabolic race to the top.  I consistently warned my subscribers and readers of my articles about not being caught holding the bag and to take defensive measures.

My most recent update was to simply try to figure out whether the continuing correction in Gold would take the form of an ABC pattern or an ABCDE Triangle Pattern.  It is becoming more clear that the official pattern is ABC.  In English it means that the first leg down from 1910 to 1702 was the “A” Wave, the rally back up to 1920 was the “B” wave.  The C wave is continuing underway and one of my longstanding targets is $1643, which is a Fibonacci fractal relationship to the prior lows and highs, and also conveniently fills in a “Gap” in the Gold chart in the 1650’s.

During these 4^th wave consolidation periods, it reduces sentiment back down to normal levels and lets the economics of the move in Gold catch up with the price action that was extended. The first area to watch is the re-test of $1702 spot pricing for a C wave low, but the evidence is for a further drop to $1643 before I would get too interested in trying to game Gold to the upside.

Here is the chart I sent out 9 days ago with Gold at $1837 forecasting a possible C wave continuing lower

I’ve stayed away from either shorting Gold or going long gold while I watch and confirm the 4^th wave pattern.  It’s simply the smart way to go knowing that upside will be difficult to obtain and downside risks are high.  It does now appear that I am eliminating the Triangle pattern and sticking with the ABC Correction with the C wave still working its way lower.  If $1702 breaks, then you should expect to see 1620-1643 as next pivot low ranges.

If you’d like to stay ahead of the SP 500, Silver, and Gold trends, check out TMTF at www.MarketTrendForecast.com and take advantage of our free occasional reports or a 33% 48 hour coupon to sign up for 5-7 updates a week.

Perhaps you’ve noticed that gold was under attack before the $165 price drop 9/22, 9/23.  So what, isn’t gold always under attack by the Establishemnt?

What’s particularly interesting is that the most recent attack occurred precisely as the the Swiss National Bank announced the peg of the franc to the euro. What should normally be immensely bullish news for gold, is being held in check. Even the illustrious Paul Krugman has joined the fray with his latest blog piece for The New York Times: Treasuries, TIPS, and Gold (Wonkish).

In an inadvertent moment of truth, Mr Krugman let it slip that

“I have no idea what drives the price of gold,” but then it’s quickly back to the business at hand.

“Why not think about what actually should be driving gold prices? And I mean think about it, rather than going for slogans about inflation, debased currencies, and all that.”

Slogans about debased currencies? Could it not be the debased currencies themselves? Now that the Swiss National Bank has committed the franc to the wrecking yard of paper monies, isn’t it just a question of simple math and counter party risk? If every central bank in the world states that their policy is to continually reduce the purchasing power of their currencies, then why wouldn’t a rational person choose to store their wealth in gold?

The real problem here for Mr. Krugman is that the situation is becoming increasingly clear to too many people. Gold is a way for the average person to opt out of the global ponzi scheme of fiat money and unsustainable debt.

Time for a little obfuscation from the master:

“OK, how do we think about gold prices? Well, my starting point is the old but very fine analysis by Henderson and Salant (pdf), which was actually the inspiration for my first good paper on currency crises. H-S suggested that we start by modeling gold as an exhaustible resource subject to Hotelling pricing.

“Here’s how it works. Imagine that there’s a fixed stock of gold available right now, and that over time this stock gradually disappears into real-world uses like dentistry. (Yes, gold gets mined, and there’s a more or less perpetual demand for gold that just sits there; never mind for now). The rate at which gold disappears into teeth — the flow demand for gold, in tons per year — depends on its real price: graph.

“Crucially, at least for tractability, there is a ‘choke price’ — a price at which flow demand goes to zero. As we’ll see next, this price helps tie down the price path.

“So what determines the price of gold at any given point in time? Hotelling models say that people are willing to hold onto an exhaustible resources because they are rewarded with a rising price. Abstracting from storage costs, this says that the real price must rise at a rate equal to the real rate of interest, so you get a price path that looks like this: graph.

“Obviously there are many such paths. Which one is correct? Given rational expectations (I know, I know) the answer is, the path under which cumulative flow demand on that path, up to the point at which you hit the choke price, is just equal to the initial stock of gold.”

Now that’s more like it! This is how a Nobel Prize winning economist goes about attacking the truth. He employs a highly sophisticated form of econo-babble designed to leave any potential dissenters in a catatonic state. A single PhD trained economist can easily defeat an entire population through this powerful form of mind control. Throw out a few choice phrases like flow demand and choke price and within seconds eyes begin to glaze over and minds start to wander. Soon enough, the great unwashed masses are just begging for the “experts” to decide their economic fates for them.

And, so Mr. Krugman dutifully earns yet another paycheck. His work as chief propagandist for the central banking system is done here.

If you’ve made it this far, be sure to check out one of the most important articles you’ve never read: Priceless: How the Federal Reserve Bought the Economics Profession.

Several articles have appeared in the mainstream press over the past several months discussing some alternative to the U.S. dollar as the reserve currency of the world. Special Drawing Rights (SDR) sponsored by the International Monetary Fund (IMF) has been mentioned. Some time ago, an article on Reuters indicated a United Nations panel has decided much of the world would like to move away from the American currency as the world’s reserve currency. This panel wanted to look into a “basket of currencies” or perhaps another entirely different, new currency to replace the U.S. dollar. Additionally, both the Russians and Chinese have indicated similar concerns.

Action has been taken to move in this direction, for example Russia and China have agreed to do some trading using each others respective currencies bypassing the need to move into U.S. dollars. There have been rumors over the years that some of the North African nations, and Middle Eastern nations were wishing to settle the oil trade in Euro’s rather than dollars.

These events and postulates don’t surprise me in the least. If we go back a few years, it was only the Austrian school thinkers that stepped forward and said the U.S. dollar, or any fiat currency, was eventually doomed. Now other nations and the U.N. are saying they really don’t trust the U.S. dollar, which is what this amounts to. I wrote about something similar happening many times and one currency that I spoke about years ago was the golden Yuan (renminbi). There was a meeting in Southeast Asia years ago, about a gold-backed Yuan. I believe any basket of currencies may be tried it will most likely fail, because none of these currencies are tied to real value.

At some point the world monetary system will probably go back to some sort of a gold standard, but in my view it will not be a true gold standard but some kind of pseudo gold standard. No one really knows the future, and I’ll be the first to admit it, but what we are seeing now is what we see at the end of all great inflations and that’s a distrust of the fiat money system and/or a distrust of the leading currency. Russia and many nation states are raising their hand and asking, “Why should anyone trust the U.S. to get it financial house in order?”

There are so many U.S. dollars in the financial system. In my view it is collapsing, and it may never collapse to absolute zero but as things unwind further it is almost certain that the monetary authorities will provide “solutions” to the problem. Right now the velocity of money is low even though a great deal of stimulus has been forced into the system via QE1 and QE2 not to mention some “off book” digital entries into the banking system globally.  Yet is because the U.S.’s trading partners, such as China and Japan, and others are holding on to dollars (low velocity) that we have not seen more inflation.  Simply stated they’re not putting them into circulation, but once that happens or they get scared or try to exchange too many of those U.S. dollars for real goods or services, it could ignite more than an inflation — it could start a currency crisis.

Most of us know that there is manipulation going on in currency markets and in the financial system as a whole. The Working Group of Financial Markets (WGFM, also known as the Plunge Protection Team) was established after the crash of 1987 and was developed to prevent another crash. I must say again, “Great job, gentlemen.” It does not work on a long-term basis. Just take a look at the stock market averages; the very idea that any group is bigger than the market is ludicrous.

Many have asked where this will lead. If you review history and what happened to the Great British Empire when America started coming to the fore, you get a pretty clear picture of where the U.S. is going to go. The pound sterling was the settlement currency on an international basis. It had all the power, all the financial clout; but then here comes America, the up and comer, and they have CAPITAL — which, in the Austrian school of economic thinking, is the means of production. So when the waning of the United Kingdom was going on and the buildup of America began, it was a transition, meaning it was harsh but it was achievable.

That same scenario is taking place right now, except it’s the U.S. dollar that isn’t being trusted instead of the pound sterling, and Asia is the “capitalistic” society because they have a great deal of the means of production. The Asian countries are producing almost everything. And I think you’re going to see them continue to produce over the next decade or so, and you’ll see a continual decline of the U.S. Empire. It doesn’t mean America is going away but it certainly is not going to be the number one productive nation in the world. It’s going to be the Asian countries, primarily China.

Yes, China has problems and in my view primarily because they have too many make work projects and built many massive cities that are empty.  There are issues all over China and look for some short term slow down in Asia overall.

However, I’m still bullish on America in some aspects. One is food; the U.S. can certainly get high yields out of the farmland it farms, although nutritional value is another matter and outside this discussion. Second is ingenuity; I think it’s almost built in to the gene pool that the American spirit is pretty much entrepreneurial. They are out looking for good ideas. How to build a better mousetrap, think outside the box, etc. And the third is education; when you look at it objectively, China is sending all their best students to American universities and there’s a reason for that. They still get the best education in math/engineering and science in the USA. America has a poor record during the mid to high school ages, but from the university level on up, America probably still has one of the best educational systems around.

Most Americans have gotten politically lazy and they’re going to pay for that in the future. They don’t read enough, they’re undereducated, and they refuse to get involved in the political system. They basically don’t have the American spirit that once prevailed. They’ve just become dulled down, but I believe — because of this economic “rearrangement,” if you will — that is going to reverse. So I’m very positive in the longer run that the American populace is not only going to wake up but shape up and move forward. It will be a leaner, meaner, and much more aware American in the next five years. And it’s going to be a tough transition for some and almost impossible for others.

Do gold and silver fit into this picture? Yes! To make the transition as painless as possible, everyone needs some gold and silver. The precious metals can be traded for any currency anywhere on the planet. Regardless of hearing more deflation talk in the news or inflation around the corner, the metals are a crisis hedge, a sure thing in a world of growing uncertainty.

Sincerely,

David Morgan

When it comes time to seller your silver or gold, do not sell it too cheap.  Make sure you get full value.

Many CMIGS clients liquidate their holdings to coin shops in their areas because they do not want to go to the trouble of shipping their metals back to us, mistakenly believing that shipping precious metals is not safe, is difficult or is costly.  When selling locally, sellers often leave thousands of dollars on the table because small local dealers cannot match CMIGS’ bids for gold and silver products.  (We know this because sellers tell us what small shops offer.)

Some silver sellers seem especially reluctant to ship because of silver’s bulk and weight.   No way of getting around silver’s bulk and weight, but shipping silver to CMIGS is safe and packaging it is not difficult.  CMIGS has posted a slide show that details how to package your silver for shipment.

We chose to a slide show so that viewers can click through (and click back) in viewing.

View How to Ship Silver.

After viewing, please use the comment feature below if you feel so inclined.  We like to know what our clients think of our projects.  A shorter How to Ship Gold slide show is planned for the near future.

A final note: you do not need to have purchased your gold or silver to sell to CMIGS.  Daily, we buy gold and silver from investors who bought from other dealers.

David A Banister- www.MarketTrendTorecast.com

In my most recent few forecasts for subscribers and public articles I’ve discussed a major correction in Gold, and it dropped $208 within 3 days of that forecast several weeks ago as Gold traders will recall.  Last week I wrote about further consolidation being required in what I’m seeing as a either 4^th wave likely “Triangle Pattern” that will consolidate the 34 month run from $681 to $1910 into August of this year, or a 3 wave “A B C” pattern.  We are right now in some form of C wave, it’s just a matter now of confirming if we are going to get a “D and E” wave to follow, or the C wave drops lower before we bottom.

A Triangle pattern serves to let the “economics of the security” catch up with the prior large movement upwards in price.  In essence, the crowd behavior pushed the price of Gold a bit too high too fast, and this consolidation pattern lets the fundamentals catch up to price action.  We had a parabolic move I discussed many weeks ago, and those always end badly to the downside.  The $208 drop in three days is a typical reaction to a spike run like that.  At the end of the day though, I had been forecasting what I call a “Wave 3” top and was looking for a multi week or multi month consolidation pattern before Gold could move higher.

Let’s examine what that triangle projection may look like.  They take the form of 5 waves, or what we can call ABCDE in a pattern.  The biggest drop is always the “A” wave, and that was 1910 to 1702 in 3 days or less.  The next biggest drop is the “C” Wave, and that was 1920 to 1793, noting it was a Fibonacci 61.8% drop relative to the A wave.  In other words, each successive wave down in the 5 wave triangle is smaller.  This is due to the sentiment finally shifting and the trading patterns moving from people chasing the hot sector or stock or metal, to the long term investors accumulating the dips.

If we end up consolidating in a “Triangle”, then Gold should end up looking something like the below pattern I drew, with a target of $2,350 per ounce many months out:

The other pattern we are watching for at TMTF is the ABC Correction pattern.  We had the A wave down to 1702, which corrected 50% of the move from 1480-1910 in 3 days. Rarely do you get a major move down like that and not get some type of “re-test” of that low, but because the fundamentals for Gold are strong and getting stronger, we are favoring the Triangle pattern still as most likely.  With that said, there is a fat and juicy “Gap” sitting in the chart around 1660 on Gold and dropping down there is what a lot of traders are watching. If that were to fulfill, then we will see an ABC correction ending around $1643, and then Gold will begin another multi month rally to new highs:

At TheMarketTrendForecast.com I teach people my crowd behavioral methodologies and give them reliable forecasts in advance so they can be prepared with their investments.  Consider working with us and following the SP 500, Silver, and Gold by going to www.MarketTrendForecast.com  You can take advantage of a 33% discount over the next 48 hours as well.