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Gold bull market … far from over

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Gold bull market … far from over

One must keep in mind that Gold is not becoming more valuable. Its purchasing power remains relatively constant over time. This bull market is unfolding, in price, because the currencies that are required to purchase one ounce of Gold are becoming relatively less valuable. This is exactly what occurred during the 1933-1946 and 1967-1980 Gold bull markets as well.

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Since Gold is always aligned with the commodity 13 year secular bull market, we are expecting Gold to top around the year 2014: 2001 – 2014.

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As you can observe from the weekly chart this bull market is expanding in complexity. . . . . Primary wave V is already more complex. Not only is Major wave 3 extending, but Intermediate wave five of Major 3 is also extending. This is exactly how markets prepare to go parabolic. The waves continue to subdivide, with minor corrections along the way, forcing buyers in at higher and higher prices. Naturally, there will be a sizeable correction at some point, when buying subsides, during Major wave 4. Then Gold will enter the parabolic Major wave 5. This will likely coincide with a worldwide economic event. The most likely culprit will be the continuously rising inflationary pressures in the fast growing emerging economies.

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Currently Gold is in a Minor wave 4 downtrend. We’re expecting this downtrend to end in February around the $1315 area or a bit lower. Upon completion Minor wave 5, of Intermediate wave five, of Major wave 3 will be underway. This next uptrend could be quite dynamic. Historically, and even in this bull market, the fifth waves have been the strongest of the five wave sequence of a similar degree. In review of the entire bull market, thus far, these fifth waves have had a 2.62 to 4.24 multiple fibonacci relationship to their third waves. This suggests two potential upside targets for the end of Major wave 3 in 2011: $1700+ and $2200+. We’ll take the conservative target of $1700+ for now. . . . .

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