Goldcorp has behaved much like ABX, however it has not been anywhere near as robust having gained only 1.8X against 3.1X. Nevertheless the EW count is essentially the same. Either a full correction is done and over with (beige) and we are in a new bull market on our way to new highs, or, this is just a first leg up in an unfinished correction that may take us to , say, the halfway mark only to then resume the down-trend to new lows, below those of just a few months ago.

G has not yet retraced the full length of the wedge, which is sort of a minimum (unlike ABX that has done more than that). This stock may only make it to $32 (4th wave) or $35 (50%). First it needs to go lower to properly retrace the first leg up.

Personally I do not believe that we are in a new bull market. Gold stocks can easily have a negative value if the marginal costs of extraction starts to exceed the market value. 95+% of all gold ever mined is still above ground and consequently the “marginal” miner has no influence on the price when withdrawing his production. In fact gold mining is intrinsically a very stupid endeavour. We spend a fortune finding it and then another fortune extracting it. Then we bury it in a vault where it is less safe than where it was before. The whole process is quite extraordinary and very wasteful.

The XAU lies somewhere in between ABX and Goldcorp, so a little less robust than ABX but stronger than Goldcorp. The XAU is the Philly gold index which contains 13 of the major gold diggers. It is in US$$.

See our previous blog from a few days ago. So far there is no decisive resolution of what is happening. A wedge or an incomplete 5th wave are still possibilities. Just a little higher we will get overlap and if we can get a little higher yet, say to $27, the probability shifts to the view that the low is in for the time being.

See also HGU and ZJG, neither of which are resolved decisively either.

Goldcorp’s chart is different when looked at in US$$, this is perhaps due to the rapid and large changes in the currencies lately. The top in the short term chart where the number 2 is, is actually 0.11 higher than the top preceding it, technically invalidating the count as shown. In light of the near perfection of the A-B-C wave four (in purple) preceding it we have no qualms about bending the rules.

Here again we have to be alert to the possibility that the drop is not entirely over. A logical target is often wave 4 of previous degree but equally often the target is wave 4 of 3 of previous degree, in this case potentially at $15. This could be accomplished by assuming that we are presently in a wedge shaped 5th wave of C down that still needs it’s 5th wave. Alternatively we will get simple 5-wave sequence down that despite the optics may not have been done yet. Presently the stock is rebounding in what, so far at least, can only be described as a corrective wave 4. At $25+ overlap starts, equality between waves c and a of 4 occurs, and the RSI will move into overbought territory. It will also have retraced about 76% of its value should it drop to about $15.

The usual then – Sept. 13, 2013 – and now charts;

So far, so good. The a and b waves of the triangle are, at least to date, clear 3-wave structures as is required within a triangle. There is the not so minor problem of a slight overlap of waves 2 and 4. Despite rules to the contrary I have found that to be not all that unusual. One thing to watch out for is if this  ( b ) leg simple continues down, straight to the trend line. Provided it does so in 5-waves that could end this entire drop from the $53 highs. For the moment we will stick with our $18 target.