Hear ye hear ye!Here's something ya'll should read. ...( 'cept recaligay8 cuz he can't but maybe he can get it read to him by ziggy at bedtime)
https://www.kitco.com/ind/Starkey/oct182006.html
Gold and Silver Special Report
By Fred M. Starkey
October 18, 2006
Timing
Cyclical Timing
The Gold and Silver markets have exhibited the same cyclic characteristics for a number of years. But, Silver has had in the past a more reliable periodicity. Therefore, our cyclic forecast will be based on the cycles that have dominated the Silver Market.
The two dominant cycles in the Silver market have been: the 34 month cycle low and the 26 week cycle low.
The 34 month cycle low was last due in November of 2001, again in September of 2004, and is due to recur in June of 2007.
The 26 week cycle low was last due in June of 2006, is due to recur ideally the week beginning January 10th of 2007, and then again in early June of 2007.
Time Projection: Gann, Fibonacci, and Irregular Proportion
I know of only three methods that attempt to predict markets in time: Gann Squares, which are based on 1 unit of price to 1 unit of time, Fibonacci relationships between bottoms and bottoms & tops and tops, and my own method of mathematical geometry based on irregular proportion. This is the same method that forecasted the November 4, 2005 low and the June 12, 2006 low for Gold and Silver.
As of this writing, projected high timing is due ideally the week beginning October 9th. The next projected low timing is due the week beginning November 6th, and again, the week beginning January 8th, of 2007. (Same as the 26 week cycle low for Silver). Platinum projects a major low for the month of March in 2007.
Based on the Timing indications from the Monthly and Weekly graphs; the January time window is anticipated to be the low turning point for the beginning of another major move to the upside.
Price Evaluation…Sections
As general rule bull markets are composed of 3 upward sections with corrective behavior after the 1st section, and corrective behavior, after the 2nd section. Identifying the correct section count is one of main keys to forecasting.
The Elliott Wave is an elaboration on this concept which labels these basic market movements as Leg I: up, Let II: down, Leg III: up, Leg IV: down and Leg V: up. Elliott Wave Theorists continue to subdivide the price movement into further intricate patterns which, for the most part, leads to confusion more than clarity. In fact, I believe most would agree that the Elliott Wave is simple in concept but is very difficult in practice.
This methodology uses the rules of balance, support and resistance, price projection, and time projection to clarify the section concept. This also allows us to measure the variance from the forecast and act when the market behavior aligns with these other indications.
Price Evaluation….Balance
The Principle of Action/Reaction is one of the basic tenets of trend following. Newton stated: “For each action there is an opposite and equal reaction”. As a corollary, we can state that the reactions in price and time tend toward equality within the Bull or Bear Market phase of each market.
The Gold Market of 1976 – 1980 was a straightforward classic bull phase which was completed in 41 months. Beginning from the August 1976 low the market suffered one, 2 month correction in 1977, followed by four, 1 month corrections before completing the bull market phase in January of 1980.
The current bull market is now in its 85th month since the August 1999 low through the September 2006 high. This overbalance in time, of all previous bull market phases, indicates that we are in a long-term bull phase with much higher prices to follow.
Since the Silver market bottomed in 2001; monthly reactions against the trend have been 3 months, 1 month, 1 month, 1 month, 2 months, and 1 month. The market has not, at this time, exceeded any of these reaction lows throughout this bull market phase.
Since the Gold market secondary higher bottom of 2001; monthly reactions against the trend have been 3 months, 2 months, 1 month, 2 months, and 1 month. The market has not at this time, exceeded any of these reaction lows throughout the bull market phase. (Refer to Graph)
Price Evaluation…Support and Resistance
As a general rule bull markets have price corrections which are 50% of the previous advance. This measurement is the 1st priority in measuring buying and selling pressure. This, of course, is measured with the reactions in time using the principle of balance to further evaluate the market.
In a bull market, reactions that hold above the 50% retacement, within the time balance, are in strong position and portend a further breakout to the upside. In a bear market, reactions that stay below the 50% retracement level, within the time balance, are in weak position and portend further breakout to the downside.
In a bull market, the next support level is the 5/8ths or the .618 retracment level. A price retracement of this magnitude generally means that more consolidation will be required to generate the next advance; but this decline does not violate the bull market structure. [The same measurements are used but the opposite direction for a bear market]
Silver: The advance from the 2001 low to the 2004 high was followed by a decline slightly below the .618 retracement level. (Cash Weekly) The advance from the 2004 low to the 2006 was followed by a decline slightly below the 50% retracement of 10.25. (The market, at this time, has recovered above this price level), but above the .618 retracement level of 9.140. This indicates that the bull market is still intact.
Gold: The advance from the 2001 low to the 2004 high was followed by a decline strongly above the 50% retracement level, which portended a major breakout to the upside. (Cash Weekly) This took place. The advance from the 2005 low to the 2006 high was followed by a decline slightly below the 50% retracement level (568.00) and above the .618 retracement level (531.00). This indicates that the bull market is still intact.
Price Evaluation……Price Projection
There are many ways to project price objectives especially for the short-term; but for the long term I know of only a few ways. The first known method of price projection is to multiply the 1st upward leg by 1.618. 2.618, 3.618, etc., and add that amount to the low. These are the initial upside projections:
Silver Projection: 2.618 = 15.00, 3.618 = 19.20, 4.618 = 23.40, 5.618 = 27.50
6.618 = 31.70, 13.618 = 56.90, etc.
Gold Projection: 2.618 = 443.15, 6.618 = 734.00, 7.618 = 806.70, 8.618 = 834.00
13.618 = 1243.00, etc.
The second known method was discovered by Tubbs. Tubbs found that a normal bull market advance was 6 times or 8 times the base. An extreme runaway market made an advance of 13 times the base. The base was defined as the first minor upward leg of the 1st section or the 1st section itself. These are longer term upside projections.
Silver Projection: First Base: 12.80, 14.17, 18.25
Second Base: 29.15, 37.50, 58.40
Gold Projection: First Base: 689.00, 834.00, 1198.00
Second Base: 1461.00, 1864.00, 2871.00
*Price is based on the Cash Market: CSI Data
The Forecast…….Short-Term and Long-Term
The current bull market has exceeded in time all previous advances since 1970. This indicates that we are in a long-term bull phase. This is similar to Crude Oil when the market exceeded the 1990 war high in 2004 which indicated a change in the forces of supply and demand.
The section count for Gold suggests that another advance to new highs (above the previous high of 725.00) will complete the 2nd section of a larger 3 section advance. Based on the cycle timing this could be completed by early February of 2007. This advance should then be followed by a modest decline into March (Projected Low Timing for Platinum) followed by another modest decline into the projected low timing and cycle low timing due in June of 2007.
A decline into that time frame that holds above the January Low should set the stage for another 3 section advance which should take us over the $1,000 level and possibly to $1243.00.
The section count for Silver suggests that this market should advance above the May 2006 high into the February time frame. From that time frame the market should suffer a modest decline into March (Projected Low Timing for Platinum), an advance, followed by another modest decline into June of 2007 to fulfill the Projected Low Timing and the 34 month cycle low.
If the market can hold above the January 2007 low into June of 2007, then another 3 section advance should take place with an upside objective of 27.50 and possibly 56.90.
As of this writing the Gold and Silver markets are due to top the week beginning October 9th with an expectant decline into the week beginning November 6th. A short-rally should take place with another following pullback or decline into the week beginning January 10th where the monthly projection timing forecasts a low in conjunction with the weekly projection timing and the 26 week cycle low for Silver.
The price decline into that time frame will tell us the extent of the buying and selling pressure. If the market can hold above the June Low, then a very bullish posture will be indicated. A decline to the .618 level will suggest that another bull phase will take place, but more likely a slower move to the upside.
Investment Strategy Recommendation:
I am not of the opinion that the short side should been taken at any time. I would only recommend a partial liquidation of previous long positions, until the Gold Market exceeds $1,500.00 and Silver exceeds $50.00. However, these upside objectives may be too low. I would only recommend taking a position that you can hold without emotional strain which will vary from person to person. As a general rule, most investors have a very difficult time holding an investment position. This is because the ups and downs of the market usually emotionally exhaust an investor’s resolve: never meet a margin call.
Keep in mind, that higher levels of prices, means higher levels of volatility. Therefore, in my opinion, positions in the futures markets should be made only with the idea of holding the position to the next upside objective. To be a short-term trader in this coming environment will be very difficult. If you have suffered extreme anxiety during the past bull market phase; then you should avoid any thoughts of short-term trading.
The timing suggests that a major low will take place in January of 2007; however, this may take place in November with a higher bottom in January; but that would be the exception; however, it is possible.
I would recommend purchasing Gold Stocks, Gold Coins, and pre-1964 Silver coins at the November low timing and on the January low timing. An opportunity to add to these positions should come in March (Projected Low for Platinum) with the highest probability to add to your position in June of 2007.
The advance from the anticipated June 2007low should last into the October – February time frame of 2007 – 2008. At that time, or sooner, I will reassess this forecast.
September 27, 2006
Written by Fred M. Starkey
For further information Fred Starkey can be reached by E-Mail at:
HarborLightsInvestment@msn.com.......or by phone at: 1-541-726-4234