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Gold's $80 Intraday Plunge: A Turn for Real?
EWI's Metals Specialty Service reveals the big picture for gold's recent drop

By Nico Isaac
Wed, 07 Sep 2011 15:15:00 ET
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On Friday September 2, I performed a two-step experiment to determine how well fundamental analysis of financial markets prepares investors for major trend changes before they occur.
 
Step One: Read the mainstream news items regarding the one market that has captured the imagination of everyone from housewives to hedge funds: Gold. On September 2, gold prices enjoyed a powerful, $50 per ounce rally to new record highs. And, according to the popular experts, the fundamental stars were aligned for further near-term gains. Here, the following September 2 new source fills in the details:
 
"In the short-term gold prices are going to be underpinned by many supporting factors, whether its eurozone debt concerns, slowing growth in the US, and the potential for another round of quantitative easing." (MarketWatch)
 
Step Two: Wait for the market to reopen on September 5. See if gold prices were indeed "underpinned by" the "many supporting factors" cited in the previous session.
 
Conclusion: On September 5, gold prices turned DOWN in a gut-wrenching decline that has slashed $100 from the metal's value. The same fundamentals behind gold's explosive gains on September 2 began to shoot blanks on September 5.
 
Fundamental analysis failed to prepare investors for the near-term trend change in gold. EWI's Metals Specialty Service, on the other hand, had the stage set beforehand. On September 5, Metals Specialty Service presented a compelling chart for subscribers depicting the clear Elliott wave, trendline and RSI signals which prompted the following comments:  

"We have good reasons to be looking for a turn in this area."  

Is gold's most recent turn an indication of things to come, or just a hiccup on the way to higher highs? 

Find out the significance of today’s move in gold right now in EWI's intensive Metals Specialty Service. Subscribe today to get the full story.

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Metals Specialty Service Editor Mike Drakulich uses the Wave Principle and 30 years of market experience to replace the endless market possibilities with higher-confidence probabilities. 

Subscribe today to get Mike's expert Elliott wave forecasts complete with key levels, price targets and valuable insight for gold, silver and other major metals.
 
Learn more and subscribe to EWI's comprehensive Metals Specialty Service now >>

Tags: Elliott Wave trading, Gold, Relative Strength Index (RSI)
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The Elliott Wave Principle is a detailed description of how financial markets behave. The description reveals that mass psychology swings from pessimism to optimism and back in a natural sequence, creating specific Elliott wave patterns in price movements. Each pattern has implications regarding the position of the market within its overall progression, past, present and future. The purpose of Elliott Wave International’s market-oriented publications is to outline the progress of markets in terms of the Wave Principle and to educate interested parties in the successful application of the Wave Principle. While a course of conduct regarding investments can be formulated from such application of the Wave Principle, at no time will Elliott Wave International make specific recommendations for any specific person, and at no time may a reader, caller or viewer be justified in inferring that any such advice is intended. Investing carries risk of losses, and trading futures or options is especially risky because these instruments are highly leveraged, and traders can lose more than their initial margin funds. Information provided by Elliott Wave International is expressed in good faith, but it is not guaranteed. The market service that never makes mistakes does not exist. Long-term success trading or investing in the markets demands recognition of the fact that error and uncertainty are part of any effort to assess future probabilities. Please ask your broker or your advisor to explain all risks to you before making any trading and investing decisions.
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