Thursday, March 19, 2015

[JNUG] [GDXJ] update

In the backlink we are either working on 3 up as part of a new motive wave OR we are near the end of an a-b-c move which will come crashing down to one final lower low before the real bottom is put in.  I do not know which it will be and neither does anyone else.   But we can monitor it in real time and thus be among the first to know because Rubicons will be crossed and when they are there will be no turning back.  When the turn does come, it is likely to occur swiftly so that as few as possible benefit from the big percentage gains that are had by being in place near the exact bottom.

This is perhaps one of the most critical junctures that I have ever reported on with JNUG because the next motive move up, whenever it might begin, should be the start of a rapid move up to around $1400 for gold at the very least.  That move would catapult the juniors to percentage gains that have not been experienced by M+M gamblers since the 2011 peak was printed.  JNUG experienced a 333% gain as part of the 4th wave triangle (the initial and thus longest leg of it).  It went from split adjusted $77 to $257.   If we are now retracing that big move down from 2011, the current move upward for JNUG would certainly be much higher than that in terms of percentage gains. 

This has naught whatsoever to do with how badly the jrs have gotten beaten down but rather with the EW model which says that IFF 5 waves down just transpired (or will have transpired if we need one more small wave down before finding the real bottom) then we need 3 waves up to the level of the prior 4th and that is ~1400 for gold.  The 38.2 fib for GLD would be 138.62.  The 38.2 for GDXJ was $81.19.  Again, this is the worst case!  Best case is that the bottoming process happening right now is the end of the metals bear and then all of the inflation from the federal reserve which was exported to the world in the form of petro dollars comes home to roost as other currencies begin to be used for that purpose.  In other words, the loss of the US global hegemony.  Said differently, the collapse of the US-driven debt Ponzi.  This will not be best case for all Americans, only those who have their wealth outside of the dollar.  This is Avi's model. EWI's model says that the bounce to $1400 gold will be a sucker's bounce and that it will then fall well below $1000.  I don't know which will occur but I do know that both models predict a significant rally into the end of 2015.

In my own WX centric model, I see a clear falling wedge (w3) followed by a move higher (4) and then another 3 wave move down.  There are two places that the top of the wedge could be drawn.  The first is the red line and the second is the blue line.  Other more complex options are available to the herd.  If this wants to go lower it could even be that we are just working on 1 of 5 right now or maybe more likely 3 of 5. 

The herd can choose in real time.  What it cannot do, however, is go down forever.  The herd cannot stay at the watering hole forever and it cannot stay at the feeding or breeding grounds forever and the longer it does so, the more urgent the need will eventually become to migrate to the next location in the historical herding pattern.  This is baked into the DNA and thus cannot be avoided.  Also, unlike other manufactured goods, gold cannot go BK in aggregate.  Some of the players can and there can be consolidation, but the world will eventually return to honest money one way or another (or we will destroy ourselves fighting about who should get screwed by the crash - or first one and then the other).  Gold and silver never went BK in history and no it will not be different this time.

So here is what I am watching for.  Today's peak was likely the peak of either
  • green 4 is the 240 model above right (red path).
  • a 3rd wave up (or part of one) that will eventually smash the top rail (blue path).

Note how the waves tried to mimic 5 waves up into late Wed and then 3 waves back into this AM and then 5 waves up into the afternoon.  That would lead many to believe that we are now working on a 3rd of 3rd up.

But the pullback into this morning was 5 waves and not 3.  Thus it was likely a flat correction meaning the AM peak was the real 5th of C or 5th of 1 depending on which model the herd will eventually take.

The thing I am looking for is an a-b-c back to the low of this AM.  Whether it occurs today or tomorrow makes no difference but if I were the herd and I was heading north what I would do would be to make it happen into the close of a trading day.  That way the chart could gap up big time at the following open by a large amount, thus leaving traders in shock and awe.  So, at some point if we see a 3 wave pullback to the level of the prior 4th that is a short term buy signal with stops set just below that 3rd wave.

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