Gold at really, really, REALLY critical technical checkpoint.

   For the long term holder (years) it is a no brainer: gold will be a lot higher simply because the dollar will eventually go a lot lower.  But in the short to mid term term nobody really knows what will happen.  This is where the challenge lies in trying to call the short term moves with wave models.

   The current short term gold chart does not inspire confidence.  I was expecting the chart to kiss the upper resistance line and then pull back and then take another run at it as  a 3rd wave which would break through and confirm the new bull market.  Instead what we got was 5 waves up, which is good, but it touched the resistance line with an ending diagonal (looks like it but not quite confirmed yet).  That is generally a reversal pattern.

If the ending diagonal is not confirmed, that will be very bullish.  In other words, if it breaks out instead of falling back down then it will take many by surprise and they will make massive purchases to cover their short term shorts.  But by far the more likely thing would be a pull back to the the 50% fib at about 128.  At that point the herd has to decide: will there be one more trip to the bottom of the larger down sloping diagonal channel (gold $1000) before the real reversal begins or will the reversal be confirmed with an explosive escape caused by a 3rd wave.  There are just so many conflicting indicators right now that I think a butterfly flapping its wings in Japan could make the difference one way or the other.

On the deflationary side (which many, including Prechter, do believe means falling gold prices), gasoline broke below $3 per gallon and the UGA chart looks to be breaking down.  That is not inflationary.  At the same time, dry bulk shipping seems to have bottomed and is now looking stronger.  It really is hard to call at this point so I think I need to wait for more data before making further model predictions.  We should know in the next 2 trading days if the ending diagonal is a head fake or if it is confirmed.  I give it 80% chance of being a real ending diagonal if for no other reason than that the chart is up against major resistance and you normally don't break through something like that with a head fake.  It normally takes a big gap within a 3rd wave.  Time will tell.