Yves Lamoureux, our new Bond King, has made a series of bold calls around the end of the epic bond bull supercycle. Besides being bullish on stocks, he now has a view on gold.
Why Our Model Values Gold At $1450
We have watched the big wave one and two unfold in the bond market of Europe. We think we have seen the turn. It is therefore likely that a huge wave three in rates has begun in earnest.
It has been our contention that the interest rate cycle would turn in 2010. It did in Europe. We stuck to our 2.5% US long bond call has the recipient of scared money. Massive spikes are always deemed turning point. We explain this phenomenon in “The End Game is Here”.
We attach a lot more importance to what takes place in Europe. Our gold model is geared that way.
The recent behaviour of gold is the best proof. How can you account for a weak gold price when the US dollar is weak? We do cover the grounds on this topic in a recent gold article. Some of the intricacies of movements are popular trades being undone.
The start of a wave three in rates sets up a deflation trap once again. Primary waves all sport typical 5 waves form. The corrective nature is mostly of a zigzag type. This is why we are short 10 years Italian Treasuries from 4.20%.A quick look at wave two is beautiful textbook Elliot. We are now at 4.62%.
The market thinks it has everything to do with politics. As you are a good student of waves, you know better. Keep the cycle in mind as we cover the gold valuation model.
We thought that gold would top in September 2010. We think of this time spent as a large degree consolidation. We have not been at all worried to miss the bull market. We have fully participated in it the last 10 years. The recent bounce is more likely viewed as a B wave. I suspect, we are at the start of a C wave. I factor the coming rates increase. Our model values gold at $1450.
We look to make a big entry once again. We are extremely disciplined and wait for things to be aligned perfectly.
Yves Lamoureux, http://lamoureuxandco.com/
Interesting. Also keeping my eye on Alf Field's gold count:
http://www.321gold.com/editorials/field/field010313.html
http://www.321gold.com/archives/archives_authors.php?author=Alf+Field
I'm bullish on gold long-term, but agnostic on intermediate-term action. We'll see who's right.
Posted by: rzero | Monday, February 11, 2013 at 04:34 PM
Gold is sitting just above a lot of support from last summer, and it looks like the decline from last fall is running out of steam.
There would have been different results if he came to my town, but gold just doesn't have much long term traction among the masses:
http://www.youtube.com/watch?feature=player_embedded&v=qf_ENBaAna0
Posted by: Virgil | Tuesday, February 12, 2013 at 07:34 AM
AAPL didn't close the gap and now looks to be in the 5th of 3 (or C) down (assuming the third wave began on Dec 3.
5 = 1 at 410 on Mar 1
Posted by: Virgil | Thursday, February 14, 2013 at 02:51 PM
Virg:
Nice call on aapl. I think your 400 will get hit.
The STU is playing up the alt count on the DJIA, which I favor. Puts us in a minor 4 instead of Primary 3. I'm looking for 13,300 to 13,400.
Hock
Posted by: Hockthefarm | Wednesday, February 20, 2013 at 03:05 PM
Minor 4, eh? That does make some sense with wave 3 about 2/3 as long as wave 1, although it doesn't channel as well as the count that has us already topped. The Dow has seemed to be leading the way since last year.
Gold is coming down to the lower part of its range from the past year and a half. It's approaching the moment of truth time.
Posted by: Virgil | Friday, February 22, 2013 at 08:45 AM
In two words it is the Fed and deficits. Take the free lunch while it lasts.
In Detroit, only 1 in 2 home owners bother to pay their property taxes. Nobody cares and it won't matter until it does.
I think Detriot will get most of my SS payments.
Very cool:
http://www.youtube.com/watch?feature=player_embedded&v=pp89tTDxXuI
H
Posted by: Hockthefarm | Sunday, February 24, 2013 at 07:57 PM