An update on Merriman's thoughts of which he has two potential scenarios for gold. All gold prices in this post are of the gold continuous contract ($GOLD) from Stockcharts.com.
One potential scenario is that the last primary cycle (15 to 21 weeks from low to low) was on May 21st ($1,166.50) and the half primary cycle low was on July 28th ($1,155.90). Since July 28th was lower in price than May 21st then this current primary cycle is bearish and gold should put in a primary cycle low soon. In fact, this week (Aug 30 - Sept 3rd) is the 15th week of the current primary cycle. The price target for the upcoming primary cycle low is $1,128.50 +/- $16.70. The price target for this current half-primary cycle crest is $1,209.40 - $1,253.90. Gold is in the upper range of that price target. Merriman has advised his subscribers to short gold with a stop-loss on a close above $1,255.
The second potential scenario is that the last primary cycle low was not on May 21st but was actually on July 28th ($1,155.90). If that is true, then this current primary cycle for gold would be extremely bullish. However, Merriman believes there's only a 5% chance that is an accurate labeling of the gold cycles because that would mean the last primary cycle was truly extended for a whopping 25 weeks from the lows of February 5th ($1,044.80) to the lows of July 28th ($1,155.90). Gold primary cycles can extend beyond 21 weeks in duration from low to low but it's unusual and happens less than 5% of the time.
Which scenario is correct? We'll have to wait to find out if gold can close above $1,255 very soon. Merriman admits that as an analyst he'd love to see gold drop below $1,159 in the next two weeks. However, as a realist, he thinks everything the U.S. government and the Federal Reserve is doing is bullish for gold in the long run.
I should add that even if the second scenario is the correct labeling of the gold cycles with July 28th as the last primary cycle low which is very bullish there would still be a major cycle low (5 to 7 weeks from low to low) due in the next two weeks. Gold would need to close below the 25 day simple moving average which is currently $1,212.20. Not much of a drop from where gold is priced right now, is it?
The first scenario is still possible based on price since gold has yet to close above $1,255. However, based on time the first scenario is looking a little less and less likely. Remember under the first scenario this current primary cycle is bearish. If this current primary cycle is indeed bearish then the price of gold needs to start declining very soon. The price of gold is still quite high very late in a bearish primary cycle - this is unusual. However, according to Merriman, Mercury has gone retrograde from August 20th to September 12th and nothing is ever normal during this time band. Mercury retrograde is also a time when you get many false buy and sell signals from technical analysis.
Personally, I'm short gold mining stocks via HGD.TO and I'm in the red. :-(
I also have a short position on COMEX silver via HZD.TO which is currently at break even.
Thanks Ken for these updates. May I ask you how accurate is Merriman overall for his subscription to the gold/silver report. Just curious. I only buy his forecast book every year..mainly for the astro stuff. The cycle stuff, confuses me because of all the different cycles people follow. I can't wrap my head around it but I do well with my own TA...enough to manage my risk and make profits. I do find many times, I can incorporate what I see on a TA basis with astrology and some of these cycles..it just depends which cycles are correct.
Last notes I had from his update was on 8/24 where he thought gold would be bearish for a few weeks a low due 1-7 week price target 1128.50 +/- 16.70 which would basically give you a range of 1112-1145...and that it could go lower. but said if it got over 1245 he was wrong. I think that is what I got out of it. We are over 1245 now and getting close to his 1255 target (so far hi today 1254.20 this morning).
Yes, I'm also aware of the effects of Mercury Retro..on ta..and also how long rallies normally last..1-4 days for equities..not sure on gold though. We are overbot but there seems to be an underlying constant bid here on gold and silver..which could be the start of the parabolic rise I think Dharma is looking for into October..it's just a feeling I"m getting here. They can't seem to take it down. I recall over the summer a few gurus including Merriman calling for a huge drop in gold before August..ie; 200-300 pt...but yet still bullish long term on gold.
Just curious what would you say his accuracy is. Thanks again
TM
