Bad news for my gold bugs friends - get ready for a deep drop coming; 550 possible

The likelihood has now increased that gold is on the verge of dropping to much lower levels than most people think possible. I've reviewed a number of times the bearish possibilities from an Elliott Wave perspective, including a comparison of my "C" wave projections with Tony Caldaro's Objective Elliott Wave alternative counts. Use the "Gold" label in the labels list at right if you want to review all the measures I've been pointing to recently as risk factors for gold - ranging from the shorter term to longer term analysis, and including sentiment data. From an EW perspective, the most recent swing high of 1007.70 can have been a B (or X) wave, which is even consistent with gold having made a new high at that time against other currencies (as an expanded flat). I've also posted some additional thoughts on gold at my UBTNB3 blogspot (link also at the right side of the page). You can also see on my daily and weekly charts (below) the weak indicators, and trendlines that will confirm a bearish view if and when gold breaks under them.

For a C (or Y) wave, then I like a projection to about 550 which would also be a 50% retracement back to the 250's level and mesh well as a C-wave objective based on Fibs from the A (or W) wave drop into the Oct. 2008 lows. Assuming that gold continues down and breaks the trendline and moving average support, and that pivot about 850, we'll refine the projection based on the wave structure as it unfolds.

Obviously this is important for gold traders and investors; but there are also implications for the dollar and currencies. Once gold completes a pullback on the longer-term charts, then it can be a wonderful opportunity to buy gold once again. Right now there is too much bullishness, and the indicators are too weak. They don't look like they "should" for a third wave up. On the daily chart, StochRSI is dropping like a rock. Slow Stochastics have turned down on the daily chart, and can easily do that on the weekly chart if gold falls under 952 (notice that's what the ChartsEdge forecast actually predicts to happen soon).

I've placed the default Elliott Wave label onto this post which references Tony Caldaro's OEW. Be aware that although Tony has gold marked bullishly, he maintains an alternative count on his precious metals chart that aligns with what I'm talking about. So I am sure that Tony will be ready to substitute his alternate chart if and when gold's price movement proves the more bullish view to be wrong.