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Gold is regarded by many as a safe haven when the going in the world gets tough. It can be a brightly shining lighthouse. Let’s look at the chart:
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Gold is one of the few charts that show a bullish five wave pattern at the moment – with maybe 7% move up to the second wave five.
And if we look at the weekly we see the prospect of an even bigger move higher:
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This suggests the prospect of a rise of over 20% by end 2010! Nice move if you can get it!
As much as I am a huge fan of Elliott I know not to get too attached to an outcome – and especially a second wave five!
But with the prospect of even a 10% move does that mean you should buy gold stocks when everything else is falling? Not necessarily. Just look at the NCM chart:
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NCM is like most equities – there is every chance it is also heading south!
When a market is falling it can be a tough game trying to pick contrarian sectors and I reckon one is better off getting behind the move down and go short!
Enjoy the ride
Tom Scollon
Chief Analyst
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