By: Jeff Cooper

Hit and Run Morning Stock Report: November 1st, 2022

Precious Metals Putting In the Last Leg Of A Two Year Consolidation

While the 2022 metals decline has carved out a sloppy and complex structure, it is one that looks nearly complete.

This is amplified by U.S. investors have been dumping gold ETD’s in the same manner they did just before the 2018 low.

We need to respect breakage up through 1730 and especially north of 1790.

In sum, given gold’s historical role as the ultimate safe haven asset, the bullish pattern suggests that we have cause to be concerned about the socioeconomic backdrop.

Interestingly the big picture structure in gold implies a powerful 3rd of a 3rd wave advance while the stock market may be on the verge of a 3rd of a 3rd wave decline.

The big picture structure I am looking at is a major wave 3 high in 1980.

The last leg or 5th wave of this wave 3 carried from 1976 to 1980 and as 5th waves often times do in commodities extended within the context of its 5th wave.

In other words, 5th waves in commodities often extend beyond the scope of their 3rd wave.

My view is that the 1999-2000 low was a wave 4 low followed by a smaller wave 3 high in 2011.

The decline into late 2015 was a 4th wave low followed by a series of “1,2’s”,  the first of which culminated in August 2018.

My belief is gold is working on completing the second “1,2”.

This second “1,2” is cobbling out the Handle of an 11 year Cup & Handle.

When gold comes out, following this tedious two year torture, few market participants will buckle in.

Even the vast majority of the “believers” will trade it versus hold it.

The net of it is that the ascent should be quite an event on the assumption that if this primary wave 5 advances, I’m expecting extends as occurred in the aforesaid 1976-1980 precursor, gold should triple or quadruple.

Keep in mind the last major low in 1999-2000 was 252 and gold rallied to 1921.

1976 was 47 years ago with 47 aligning with December 5th.

Remarkably, December 5th is 180 degrees straight across and opposite 1921, the big price high in the fall of 2011.

Using GDXJ as a proxy for the metals, we see an inverse Head & Shoulders pattern (bullish).

The Neckline is 32.30. Above the Neckline gives a projection to the 38 region.

This ties to the breakdown zone from June…with the overhead 200-day moving average at 37.

As well there is a declining 3-point trend line that ties to 30,

A move above 30 triggers a Rule of 4 Breakout.

Consequently, an upside Cascade pattern is on the table:

If GDXJ drives through 30, there is a strong likelihood it will follow through knifing through 32.30 perpetuating upside acceleration.