GLD likely tracing out 5th of C, bottom in sight

I've posted many times over the past months that gold has been in a normal bull market Elliott wave A-B-C retracement (pull back) for some time now (yes, bull markets do have pull backs!).  As a result of these declining prices, many people have been thinking it is a bear market.  I do not think this has been the case.  In my experience, nothing goes straight up or straight down.  The Elliott wave principle is very clear on the matter: after 5 waves in the primary direction, the market pulls back in a 3 wave retracement.

In any case, many people find it difficult to sit through the ups and downs and so foolish people are again calling gold "risky".  These would be the same people who think the dollar is safe and that stocks and bonds are a good value.  So it will be interesting to see how they react if GLD's price continues following my EW model.

Take a second to review the model prediction in my last post.   Now, compare that with today's chart (below).  To be sure, the model is being followed quite closely by reality.  What's cool (at least to me) is that the prior chart was still in an uptrend when I put out my last post calling for one more down wave and within a couple days of that post the chart indeed broke down.

So, here are the things I am looking at right now on the chart:

• I think this is the C wave playing out and so the predicted blue wave down is 5th of C.  The model is predicting a bottom for gold sometime within August 2013.
• The 3rd wave was extended and so the 5th wave will likely not be.  In fact, I expect the 5th wave to be the same approximate size as the 1st wave.  Given this, I expect wave blue 5 to bottom out mid channel thus forming a failed 5th wave and a very bullish inclining double bottom (see red line).
• The 4th wave was a re-test of the 38.2 fib from below and it was rejected as expected.  The market has to give the price tree one final shake to see if any more sellers can be made to fall out of it at the bottom.
• If the chart does bottom as modeled, the confirmation of the major trend change will likely come in the form of a break out of the top of the channel (green line).  Once the down trend is broken I believe that buyers will come running back in en masse. 
• If the chart breaks out as expected, it will likely be forming a 3rd wave up.  3rd waves are never the shortest so it suggests that the 3rd wave will outperform the first wave which ran from $40 to $185.

From a fundamental perspective, gold miners are shutting down capacity all over the world right now because only their best mines have production cost structures that make it economical to mine gold at "only" $1200-$1300/OZT.  Most of their mines are not rich enough in deposits in order to be profitable at today's gold prices.  In addition, gold workers (miners) are demanding (and receiving) more pay for their labor as inflation in their food prices makes it harder to scratch out a living in the labor intensive gold mining regions of Africa.  Rising wages play havoc on production costs.

Right now, the odds strongly favor a bit more to the downside for GLD followed by a really big, eye opening rally which IMVHO will see corporations begin to keep gold on their balance sheets as an asset right along with cash and securities.  Nobody in the financial media is predicting this and I think it is going to catch a lot of people by surprise.  In fact, I think it will be the remonification of gold that is likely to be the central driver of GLD's coming 3rd wave breakout.  I expect that part and parcel of this will be the exposure of government's gold suppression efforts which today are considered as nothing more than conspiracy theories by most people.  3rd waves are often accompanied by big paradigm changes and I expect GLD's 3rd wave to be a doozy.