It is a little like flogging a dead horse but nevertheless we continue to look at ABX frequently in the hope that it may give a clue as to whether or not we are already in the anticipated bull leg for gold.

Looking at the medium term chart, on the left, it would be entirely possible that a wedge had been completed at the Oct. lows. The problem with that is that the 5th wave is disproportionately small, both in time and size. And the 5th wave does not reach or exceed the trend line which, in this kind of wedge, is relatively unusual. The question then becomes what is this. Since wave 2 is a zig-zag we would expect 4 to be a  sideways move, typically a triangle or a flat, or an irregular triangle or flat. The flat should not go beyond $15. In this case the flat is skewed to the downside and is already at an ideal point. If the structure morphs into a triangle from here we should get waves d and e still, in some cases it can get even longer.

Having said all that it still remains a fact that the target is not that far from $10 but could be deeper. On the bounce the stock could easily reach about $23. So on a risk/reward basis you might want to continue to hold if you bought with an $11 handle. This is not the case with short options as time decay can be considerable.

Below is the Big picture once again as a refresher;

We are now quite confident that ABX will turn out to be a buy at just over $11, say $11.25, and that its initial target will be around $23 – which is a double plus. We are presently in the 5th of the 5th of C of a very large A-B-C. It is looking like a wedge that should stop above $11. RSI and MACD are already announcing a turn-around. This does not mean that we are bullish long-term but it does mean that this is a very tradable move very relatively low risk.

The XAU is in the exact same position which adds credibility to the analysis.  60 has been our target for a while now. We got to 61+ so we may yet get there and if not so be it.

I have left the Bigcharts deliberately the same size so you can click on them and move them around for a better comparison. Clearly ABX was one of the weaker stocks out of the 13 in the Philly gold stock index. That is exactly where you want to be when things take a turn.

Back on Febr. 3d we recommended selling this stock at about $22(saving you 40+%).The reason was simple that there we had a near perfect a-b-c up. We left it alone for the better part of half a year which is the hardest part. When I was working on the institutional side I once explained to my boss and president that most of the time he was paying me to do nothing. Perhaps I should have elaborated as , in hindsight, he obviously did not understand.

   In any event here we are at an exactly similar juncture. Another a-b-c, this time down, may be complete at these lows, give or take a millimeter. The market loves harmony and symmetry and here it is again. Of course this could just be part of a wave 3 followed by a 4 and 5 much lower but that would bring the stock to a ridiculous level close to zero. Furthermore the RSI and MACD are also suggesting an imminent turn.

    Interesting in this regard is a Swiss referendum on November 30, just 3 weeks away. What it proposes is, in essence, the return of the gold standard at least for about 20% of the money outstanding, basically where it was more than a decade ago before the Swiss Central Bank started selling the stuff at rock bottom prices (Just like the boys and girls on Threadneedle Street). If it passes, and there are indications that it might, it would not only be a major embarrassment for the authorities who have steadfastly opposed such a move, but it also would require Switzerland to buy something like 2/3 of the annual world production on fairly short notice. In short fireworks soon is a distinct possibility!

On the basis of the XAU, we are definitely close to our original target, set a long time ago, of 60. It’s low today was at 62 and a bit.