Table 1: D-wave Analysis
This unexpected outcome suggests either further downside to come or the forces driving gold higher have unexpectedly intensified. The rare, double-peak, bullish money flow setup in early 2012 hints at the latter (see chart below).
Chart: Gold London P.M Fixed and Gold Diffusion Index (DI)
Can gold really be off to the races from here? While anything is possible, a historical review of A-B-C-D cycles should temper bullish expectations. A-waves rallies tend to labor against the current of overhead supply created during emotionally painful D-wave decline (see table 2). This is why A-wave rallies tend to be characterized as climbing the wall of worry.
Table 2: A-wave Analysis
C-waves contain every major advance in gold since 2001. Here's the good part, another C-wave advance will begin in 2012 or 2013.
Headline: Greyerz - Gold to Begin a Major Advance Starting Next Week
When asked about gold, von Greyerz responded, “Short-term the consolidation is finishing here. We could see a move higher beginning next week. Looking at our proprietary cycle system, that move could continue until the end of March and this would be a strong move before we had any correction.”
I would also add that I expect the gold shares to move faster than gold to the upside.”
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