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Re: Gold’s near future

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  • Fri, Mar 13, 2009 - 12:19am

    #53
    Peak Prosperity Admin

    Peak Prosperity Admin

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    Re: Gold’s near future

Patrick,

Robert Pretcher of http://www.elliottwave.com has for sometime proposed the theory of "All the Same Markets". The basic theory is that all the markets (stocks, bonds, commodities, real estate, and PMs) will move up and down together because the primary cause of their movement is the credit creation/destruction cycle (as more credit becomes available, all the markets roughly rise together, and as credit becomes tighter, all the markets drop together). I think he first proposed this theory in 2005, when he observed that the credit bubble was causing all markets to defy their typical roles, and rise together. In the fall of 2008, when the credit bubble was seriously "popping", we saw the decline of all asset classes, including gold. Many people at that time could not understand why the value of gold was dropping during the midst of this unfolding financial crisis. I think Pretcher’s "All the Same Markets" theory explained this situation well. 

Long-term, Pretcher currently believes that gold will eventually drop below $680, before starting on a significant bull run in the years ahead. Short-term, he feels that it will bounce of the $900 levels a few times before breaking that support level and dropping lower. I think the recent rise was one this bounces.

Over the last 10 years, Pretcher has made me a believer with his forecasts, but I must concede that his timing is not always very good. He is a very good trader, but he is still human.

Jeff