If the Dow-Gold ratio bounced up higher, will it be from the Dow rising or gold falling (or both)? Checking gold in 3 time frames

The Dow-gold ratio has been making a stealth move up, which gold bugs haven't exactly been trumpeting (wonder why?!). This week's free chart from "Chart of the Day" depicts this, so I'll show that with their brief comments (see below). Then also, I'm going to present my charts of gold on three time frames - the daily, the weekly and the monthly. Why? because by definition, this ratio depends not only on whether or not the Dow continues to rally, but also whether gold moves higher or lower. The bottom chart I've posted here shows that gold reached a big low in the 1999-2001 time frame, which has a lot to do with the ratio chart. But first - it's the daily chart ($GOLD) that looks the most positive right now. The poke up of the last couple of days moved above a downtrend line which naturally looks bullish, and the daily chart's indicators are also more positive. However, gold did not move to a swing high over $967 that would put the stamp on the gold bulls' case for new highs. There are two competing Elliott Wave counts for gold, which are quite different as to whether it goes up or down next. As far as I can determine, there are cycles reason to think that gold remains weak and therefore favors the EW count that's more immediately bearish (my "C" wave down idea); but I don't know that it's a cinch. Tony Caldaro depicts the more bullish case in his primary count, as you can see in Tony's gold chart (below). He also shows the more bearish case in his alternate count in his GPX chart (also below).

The indicators on the weekly and monthly charts look weaker. That, along with gold not having made a substantial new swing high as the dollar lost support on Friday (as I discussed in an earlier post here this morning), leads me to suspect that the more bearish, "C" wave down idea remains the more likely for gold right now. That also means that the move up in the Dow-gold ratio can continue, just because of gold weakening. Looking at the chart presented below by "Chart of the Day", it seems that the broken trendline is a natural target for this ratio to touch back up toward. Then it will be interesting to see where it goes after a kissback of that trendline.

Chart of the Day
"Today's chart presents the Dow divided by the price of one ounce of gold. This results in what is referred to as the Dow / gold ratio or the cost of the Dow in ounces of gold. For example, it currently takes 9.2 ounces of gold to “buy the Dow.” This is considerably less that the 44.8 ounces it took back in 1999. When priced in gold, the Dow is down 79% from its 1999 peak and the scale of the current two-month rally has not distinguished it from the many bear market rallies that have occurred over the past decade."

"Webmasters, journalists, and bloggers may post an occasional free Chart of the Day on their website as long as the chart is unedited and full credit is given with a live link to Chart of the Day at http://www.chartoftheday.com."

Below are Tony's daily and weekly charts for gold, with his primary count for the wave 3 up idea to new highs (which is my alternate count):

Next, below are Tony's GPX daily and weekly charts with his alternate count marked in precious metals (GPX) charts. These align with my primary view of a "C" wave down to re-test the October 2008 lows:


Here are my daily, weekly and monthly charts as I described above. As I mentioned, on the daily chart gold poked over the most recent downtrend line. But let's note - that channel's bottom line really could have been more shallow to "fit" the swing lows - in which case, the move up would probably only be testing the upper line from below! The indicators on the daily chart are looking okay, but are not all in "trend mode". And those on the weekly and monthly charts are not as bullish.

I'm going to add another note especially for my gold-trading buddies, based on looking at the monthly chart, and remembering some work I did almost a year ago on the long-term gold chart and its Fibonacci relationships. I remember working out that the 1033 high was at a Fibonacci 1.382 extension level from the peak that arose after the 1970's issuance. Looking at the chart now, we can see that gold rose from about $250 to about $450 - a $200 rise. Then in a symmetrical move, it rose to the $650's, for a total rise of about $400. Then after a conslidation that looks somewhat like a triangle, it moved up again to peak at $1033 (and in other currencies, it moved to yet higher levels more recently when gold moved to what I think may be a "B" wave high at $1007). So from that triangular consolidation, it moved another $400. The symmetry of this move is reminiscent of the recent rally, the internal symmetry of which is much of the reason why I suspect it's merely a "B" wave. As I ponder the internal symmetry of the rise from about $250 to $1033, and remember that it reached a Fibonacci 1.382 extension level, I realize this would be consistent with the entire rise from the 1999-2001 lows to the 2008 high being one massive, higher-level B wave! Folks - if this can be an accurate Elliott Wave count, it would be extremely bearish for gold - although it doesn't really seem to make sense, either with the fundamentals, or with the implication that gold could drop in some massive C-wave well under $250. Since this sounds so far-fetched, I certainly will not push it; instead, I'll ponder this some more and see about some other big-picture alternatives that seem more likely. Meantime - we've certainly got the daily and weekly charts that will will see gold "tipping its hand" soon enough.