Looks like we may reach the target of $8 Canadian or $6 US. If we do the stock will have dropped something like 90% in US terms and actually a little less in Canadian terms. I like the large chart as it demonstrates what a C wave will ultimately look like. We will have quite a number of them.
This expanding diagonal triangle is picture perfect. The line is at about $8, the retracement should, repeat should, be up to the starting point which is at $23 and all this should happen relatively fast. A buy here or a little lower!
The XAU may also be sporting one of these diagonal expanding wedges;
Alternatively you can add a 1-2 at the top and a 4-5 at the bottom. Here the RSI is lower than it has ever been during the past 5 years.
Yesterday gold fell about $26 or 4%, give or take. ABX fell almost 16%. We do understand that as you approach the marginal costs of a producer, the impact on the stock is disproportionate to the change in the price of gold (oil, whatever), but this is a little ridiculous. 4X as much? Perhaps a sign of (the beginning) of capitulation. We believe there may be one more push down towards $ 8 or so.
In our opinion ABX is doing a full correction, that is an A-B-C from the recent top of $52+. I have used semi-log scale charts as they depict the proportions much better when such large moves are involved. At one point we thought the C could develop as a contracting wedge and consequently could have been complete at the $11.63 low. We did get a very nice bounce but it could not break the upper trend line. Now we are entertaining the idea that a expanding wedge is forming as the whole of wave C. This means that the stock could, but does not have to, move all the way to the lower trend line at about $8. From the structure it looks like we need another small 4 and 5 of 5 of C. This is supported by the RSI. You will notice that when it hits a low it takes a little while for the stock itself to make a corresponding low. The lag could be as long as a month but under the circumstances, that is where we are in a capitulation phase, things may happen more rapidly.
The XAU at about $48 is in an identical position .
These charts are both of ABX. On the left as measured in Canadian dollars and on the right the same thing except in US dollars. The consequences of the differences between the two can have a substantial impact on the count in EW terms that one would come up with. Things like overlap, where the top is, staying in the channel are all different depending on the currency. This is a philosophical issue that I am sure will never be answered, primarily because EW is simple discarded out of hand by some or followed with the fanaticism of myopic cultists by others. I don’t have the answer but in this case I would prefer using the US$ chart as gold is measured in US$, ABX’s operations are in the States and they report in dollars. Put in other words, the chart on the right is free from currency distortions. So is the detailed one below;
Our best guess here is that the entire correction took the form of a double zig-zag, i.e. an a-b-c X a-b-c. It is fairly symmetric and already well outside the channel. From the lows of about US$10 we appear to have either a wave 1 followed by an a-b-c wave 2, or a series of 1-2. In both cases the stock should go up. The XAU, HUI and CEF fund all have triangles that they should return to. None has done so so far.