Dr. Robert McHugh on Gold & Silver

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“Above we show the big picture for Gold. Gold bottomed July 20th, 1999, wave II’s bottom. Since then, wave III up has been one of the all-time greatest Bull Markets in Gold. The question this weekend is, is Gold’s big Bull market from the July 20th, 1999 low of 252.80 over? Gold remains in a well-defined rising trend-channel, and our Elliott Wave mapping analysis shown above says no, the Bull Market rally in Gold is not over.

“Wave III so far has taken Gold up 1,670 points to the September 6th, 2011 all-time high of 1,923, which was a 761 percent gain in 12 years.

“There are many reasons we do not believe Gold has topped, and believe that Gold has much higher to go. Wave threes that are not part of a triangle pattern are impulsive, meaning they move the price vertically. These impulsive wave threes (in this case wave III) are made up of five subwaves. Above we can clearly see that wave III so far has only produced two subwaves. This means there has to be three more waves coming, two of them rally legs. In stocks, typically wave threes are the most dramatic. In precious metals, typically, wave fives are the most dramatic. Above we see that wave (3) up and wave (5) up are still in the future. We believe the consolidation over the past three years has been a wave (2) pattern. It has been forming for 36 months, about a third of the time wave (1) up took, which is normal for corrective moves. Once wave (2) down completes, which we believe has likely bottomed, Gold should head for a price target of 2,700 to 3,000 when the coming wave (3) up finishes. Monetary hyperinflation may eventually send Gold as high as $7,000 per troy ounce many years from now as wave V up takes shape.”

Following is a shorter term chart provided in a special weekend edition from Dr. Robert McHugh.

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“Gold is finishing wave e-down of a double zigzag for wave (2) down. If so, the wave (2) down correction from September 2011 is approaching completion and (3) up will follow. I do not expect Gold totake off like a rocket initially, since there was so much psychological damage from the decline the past three years, however I expect Gold to crawl higher for a while, and then once the coming eco-nomic crisis is evident to all, and the Fed starts QE 5, Gold will accelerate to the upside. The timing for that high momentum rise could be about a year from now. Between now and then Gold should quietly work its way higher, rising on low momentum, but rising nonetheless.”

Regarding gold shares, this is what Dr. McHugh had to say about the HUI also known as the Gold Bugs Index.

The HUI Gold Bugs Index

HUI

“Mining stocks are finishing wave 5-down of c-down of (2) down, which may be complete. The five wave decline for wave c-down from mid-2011 is really about as textbook as they come. Wave 2 was a zig-zag alternating beautifully with wave 4 which was a symmetrical triangle. Mining stocks are inside wave 5-down. Mining stocks will begin wave (3) up once 5-down is complete, slowly at first, then will gain upside momentum later in 2015 as QE-5 is announced.”

Dr. McHugh also had some very hopeful comments on silver.

Five Year Silver Chart

silver

“Silver looks to have finished wave c-down of (2) down, the 38 month corrective decline from September 2011. Silver should start a rally now that lasts several years, starting out slow at first, then gaining momentum later in 2015.”

Please note below comments on silver from J. Michael Oliver. Quite correctly in my view, Oliver believes silver will lead gold up and will in fact outperform gold in percentage terms.

But summing up the gold views of Dr. McHugh, here is what he said after the markets closed on 3/27/15.

“Gold looks to have finished a Declining Wedge since May 2013. These patterns are termination bottom patterns, and it means Gold is headed much higher during the last 9 months of 2015, headed toward a minimum of 1,425ish by year end. It means that Gold could see a 25 to 30 percent rise later this year. This means large degree wave (3) up has started, and within that rally, which is in its infancy, the first small degree wave {1} up looks close to completion, meaning that short-term, small degree wave {2} down is next, a partial retrace of the rally from March 17th.”