Alf Field: Correction in Gold is OVER and on Way to $4,500+! (+3K Views)

There is a strong probability that the correction in the price of gold [down to $1,523] has been completed. The up move just starting should be…the longest and strongest portion of the bull market…at least a 200% gain… [to] a price over $4,500. The largest corrections on the way to this target, of which there should be two, should be in the 12% to 14% range. [Let me explain how I came to the above conclusions.] Words: 760

So says Alf Field in edited excerpts from his original article*.

Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!) has edited ([ ]), abridged (…) and reformatted (some sub-titles and bold/italics emphases) the article below for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement.

Field goes on to say, in part:

There is a strong probability that the correction in the price of gold has been completed. In EW terms, [read Gold Bounce Confirms Bull Market Intact on Its Way to $3,000 – $10,000 for another analysis] the correction consists of three waves, an A wave down, a B wave rally and a final C wave decline. There is usually a relationship between the A and C waves. Often they are equal or have a Fibonacci connection. The chart below is of the gold price using PM fixings:

In this case, the A and C waves are equal in percentage terms at 14.5% and 14.7%. The overall decline from $1895 to $1531 is -$364 or -19.2%. In my speech to the Sydney Gold Symposium last November, [which was edited into 2 articles, namely:  Alf Field: Gold Going to $4,500/ozt. in Next Wave Towards Parabolic Peak and Alf Field is Back! The “Moses” Generation and the Future of Gold] showed that the largest corrections in the previous Intermediate wave from $700 to $1895 were about 12% in PM fixings. The forecast was that the current correction from $1895 would be one degree of magnitude larger than 12%. A decline of 19.2% qualifies as one degree larger than 12%.

An interesting observation is that if 12% is multiplied by the Fibonacci relationship of 1.618, the result is 19.4%, very close to the actual 19.2% decline for the correction. [Read Contracting Fibonacci Spiral Puts Gold Near $4,000 by 2013 and $7-10,000 by 2020] The chart below is of the gold price in Comex 2mth forward prices:

The Alf Field: Gold Going to $4,500/ozt. in Next Wave Towards Parabolic Peak portion of the Gold Symposium speech suggested that the correction would be between 21% and 26% in spot gold prices. The actual decline was from $1920 to $1523, a loss of -$397, or -20.7%. This is just below the target range but qualifies as one degree larger than the 14% corrections in the previous up move from $680 to $1913 [per troy ounce. Read What Do Gold Measurements “Troy” Ounce and “Karat” Really Mean? for a full understanding of the difference between an ounce and a troy ounce.]

The C wave of the correction in the chart above reveals some symmetrical subdivisions which confirm that the C wave was completed at $1523 on 29 December 2012. With all the minor waves in place and with the correction being of the correct size, that should be the end of both the correction and Intermediate Wave II.

The probability of this analysis being correct is high, perhaps 75%.  Smaller probabilities allow for: (i) this to be an A wave of a larger magnitude correction; (ii) the current correction becoming more complex, perhaps reaching the lower price targets (e.g. -26%); and (iii) the possibility of deflation, defaults and depression emerging, also testing lower price targets.

The up move just starting in gold should be Intermediate Wave III of Major Wave THREE, the longest and strongest portion of the bull market. The gain in Intermediate Wave I from $680 to $1913 was 181%. The gain in Intermediate Wave III should be larger, at least a 200% gain. A gain of this magnitude starting from $1523 targets a price over $4,500. The largest corrections on the way to this target, of which there should be two, should be in the 12% to 14% range.

To achieve the EW target of $4,500/ozt. on the next upward move [in gold] will require something to trigger substantial new buying of gold. What could that event be? By definition, it will be a surprise to all market participants, a “black swan” event. That doesn’t prevent us from making a guess [and] one likely area from which problems could emerge…[would be] derivatives. [I explain why that might well be the case in my article Alf Field: Will Derivative Losses Be Black Swan Event Propelling Gold to $4,500?.]

*http://www.24hgold.com/english/news-gold-silver-gold-correction-is-over.aspx?article=3766990104G10020&redirect=false&contributor=Alf+Field&mk=1

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