Here is a bit of reverse engineering to illustrate possible paths for this stock. We have chosen 3 possible levels for the A leg (of an A-B-C), where it is now, $23 where the 4th wave resides and $30 which represents a 50 % retracement. Furthermore we have assumed that the A and C legs will be about equal. We are preferring the blue one, simple because it is in the middle. In that scenario you would go up to $23 in the A leg, then drop to about $15 and then rise to just under $30 in the C.

After that the assumption is that the stock will fall in the same relative proportion that it did in the past four years, that is down by about 84%. This gives you the targets for the entire correction and also the in between levels where you can buy back in if you sold.

Again, this is just an attempt to create a rough roadmap. None of it may come true but it may just turn out to be more accurate than what your gold bug broker tells you.

It has happened a little faster, we are now well above $16 and have left a small gap on the open. Luck favours the brave, so sticking to our target of $23 may be the most beneficial strategy. The $23 is the normal target after a diagonal, it is very reliable . Perhaps it might even go higher but we would certainly not want to outstay our welcome. Both RSI and MACD are pointing to an imminent turn.

See our previous blog where we targeted $8 as an entry point and $23 or so as an exit point, both based on this expanding diagonal triangle. We appear to have broken out above the upper line of this pattern and should now get to $16 over the next few days. If you are uncomfortable that would be a good point since you would have doubled your money. But if you are a little more venturesome you might just want to stick around till we hit $22+, a little bit under our expected target. You can then brag to your neighbour that you almost tripled your money in, of all things, gold stocks. If he wants to know how, tell him you read this blog. Then if he asks if it is expensive, tell him it is free, at least for now.

The usual then, Aug. 4 , and now charts;

So after a few false starts that were recognized in time our target was set at $8 Can. or $6 US. This is the diagonal that we have been talking so much about. It is shown on semi-log scale charts. The next target should be around $23 or , in the worst case, at least $16. These are the starting point of this pattern or a 4th wave of previous degree. You are up about 35% had you bought at the target level, however there is a lot more to go.

Fundamentally the impetus for this up move must be the realization that the Fed. is going to do absolutely nothing for, perhaps, a very long time. For the sake of completeness we repeat the big picture from Aug.4 below;

This chart is on a normal scale but uses stock prices in US dollars.