Gold/Silver Report

24 August, 2011
Please read the disclaimer at the end

Gold multi-decade rise! No more safe haven.

Please note that argument given below are based on certain assumption and fitted best as per “Elliott Wave Principle- Key to
Market Behavior (originally propounded by R.N. Elliott and compiled by A.J. Frost and Robert R. Prechter, Jr.). Below
analysis, is only expressed in good faith but the accuracy is not guaranteed. This analysis never says that market will exactly
behave as mentioned below but it presents best possible count. Counts are based on probabilities and are not certain. The
purpose of this analysis is to educate interested parties only. Investor or trader should know risk associated with investing or
trading in the commodity market.

Gold buying rush is seen at its peak. All fundamental logic seems in favor of Gold bull. But, as we said
earlier in our Gold-Silver report that market does not follow fundamental logic. Wave pattern suggests
that last rise in Wave 5 is has given through over. This suggests, gold is in final move in fear. All non
financial media now has started to project Gold in INR 50,000 by next year. Remember, last time we
gave you warning signal on silver in similar kind of news in which they claimed silver to touch
INR100,000 by the year end. Thus, this is the actual time for contrarian out look in Gold. Please have
look in detail analysis in Gold.
Gold Bubble parabola is about to burst
A parabolic exponential rise similar to Silver rise in Gold has witnessed now. This hyperbola rise in
Gold sending to the bubble territory. An explosion of bubble is impending. The fear is high at this time
and consensus of Gold rise further is common nowadays. All logic seems valid at this moment for gold
bullishness but beware every bubble needs to explode at some point. And at current level, high
caution to the downside should be kept in mind. An intraday reversal with correction over 7%-10%
will signal that the top would have been formed in Gold.
 Gold/Silver Report
24 August, 2011
Please read the disclaimer at the end

Gold Monthly (Log) - A common through over in its final move

A common through over in 5th of 5th wave in commodities is general tendency. An intraday reversal
to the level of $1823 after the recent top of $1912 per ounce may signal that the top formation has
already been completed. But, only fall below through over point (i.e. $1800 per ounce) will confirm
that the top has already been placed. Any rise above $1912 per ounce may take Gold towards $1930-
$1937 per ounce. If the top has already placed at $1912 per ounce then prices should accelerate
downwards quickly. Be cautious! Reversal in Gold will be a violent action to the downside. Any top in
Gold will be followed by straight 20% drop within 2-3 weeks. Note that an ideal target after 5th
wave completion is near bottom of previous wave (4) in one lesser degree. And the bottom
of previous wave (4) in one lesser degree is around $1043 per ounce.

The initial drop in Gold will be around $1500 per ounce within 2-3 weeks if the top has
already in place at $1912 per ounce.
 Gold/Silver Report
24 August, 2011
Please read the disclaimer at the end

Silver parabola got burst in Early May 2011

A parabolic bubble and burst in Silver: The similar kind of parabolic bowl in Silver had seen few
months back and fell hard below parabolic bowl within 2 weeks. That’s the nature of bubble burst. When
it burst nobody got time to exist from long positions. Late entrant in Silver caught in trap. We cautioned
in that time to be prepared for such huge fall. And investors who read our earlier report must have been
benefited if somebody took seriously that report. We are again warning for another steep decline in Silver
to the level of $26 within short span of time. Short sellers should manage their risk at $44 per ounce to
$46 per ounce to cover short position.

Silver Monthly (log) - Edging lower after retracing 68%

(See detail analysis in next page)
 Gold/Silver Report
24 August, 2011
Please read the disclaimer at the end

Silver Spot (Monthly) (see chart in page 3)

Once silver has given through over in its final 5th wave (top at $49.7860 per ounce) and then fell around
35% (bottom at $32.3290 per ounce) within 2 weeks. It fell below through over line first and again took
resistance at this line near $44 per ounce. Next segment of fall should be intense in silver sending it
below $26 per ounce in short span of time again. First confirmation of this bearish stance will be below
$36.9190 per ounce in Silver spot.

Silver Spot (Daily) - Ready for roller coaster fall.

Second wave of intermediate degree wave (2) almost completed in Silver. Now, it’s ready for another
roller coaster fall in this metal. The next segment of drop should take Silver below $26 per ounce in
short span of time. Key stop loss point is $44.17 per ounce and confirmation for start of Intermediate
Degree wave (3) will be below $36.9190. The first stop in silver will be around $40 per ounce as shown
in the chart below

We have given some useful information on Elliott Wave Principle which is extracted from the
book “Elliott Wave Principle– Key to Market Behavior” by Frost and Prechter”.

If you are new to Elliott Wave Principle you must look at Pages 5-7 in this report. Those who
have knowledge about Elliott Wave Principle need not to look at these pages.
 Gold/Silver Report
24 August, 2011
Please read the disclaimer at the end

A brief note on Elliott Wave Patterns and Degrees

Tables & charts shown below are extracted from the basics book of ‘Elliott Wave Principle’ by Frost and
Prechter.

The chart given above shows that how

the Elliott Wave pattern develops. The
chart shows a complete Cycle of a
pattern. After every one complete
advance three corrective decline will
follows as a-b-c.
On the right side, different degrees of
Elliott Wave has been given.
Understanding Elliott Wave degrees is
very important for student of Elliott
Wave. The larger the degree larger
will the time period.

Basic Rules for Motive Wave Pattern:

1) There are total of Five waves in Motive Wave of progression. Wave 1, 3 and 5 are with the trend
and Wave 2 and 4 are against the trend.
2) Wave 2 and 4 are followed by corrective patterns as a-b-c as Zigzag and flat correction and a-b-
c-d-e as triangular corrections.
3) Wave 2 never falls below the starting point of Wave 1 and Wave 4 never enters in the territory
of Wave 1 except diagonals.
4) Wave 3 can never be the shortest among Wave 1 and 5.
5) Corrective Zigzags forms 5-3-5 patterns while Flats forms 3-3-5 pattern.
6) Wave b of Corrective Zigzag never moves above immediate top of Motive Wave while flats
usually do.
7) Corrective zigzags usually retraces 61.8%-78.2% against the trend.
 Gold/Silver Report
24 August, 2011
Please read the disclaimer at the end

Glossary of Elliott Wave Principle Terms

(Extracted form— http://www.elliottwave.com)

Alternation (guideline of) - If wave two is a sharp correction, wave four will usually be a sideways
correction, and vice versa.
Apex - Intersection of the two boundary lines of a contracting triangle.
Corrective Wave - A three-wave pattern, or combination of three wave patterns, that moves in the
opposite direction of the trend of one larger degree.
Diagonal Triangle (Ending) - A wedge-shaped pattern containing overlap that occurs only in fifth or C
waves. Subdivides 3-3-3-3-3.
Diagonal Triangle (Leading) - A wedge-shaped pattern containing overlap that occurs only in first or
A waves. Subdivides 5-3-5-3-5.
Double Three - Combination of two simple sideways corrective patterns, labeled W and Y, separated by
a corrective wave labeled X.
Double Zigzag - Combination of two zigzags, labeled W and Y, separated by a corrective wave labeled
X.
Equality (guideline of) - In a five-wave sequence, when wave three is the longest, waves five and
one tend to be equal in price length.
Expanded Flat - Flat correction in which wave B enters new price territory relative to the preceding
impulse wave.
Failure - See Truncated Fifth.
Flat - Sideways correction labeled A-B-C. Subdivides 3-3-5.
Impulse Wave - A five-wave pattern that subdivides 5-3-5-3-5 and contains no overlap.
Impulsive Wave - A five-wave pattern that makes progress, i.e., any impulse or diagonal triangle.
Irregular Flat - See Expanded Flat.
One-two, one-two - The initial development in a five-wave pattern, just prior to acceleration at the
center of wave three.
Overlap - The entrance by wave four into the price territory of wave one. Not permitted in impulse
waves.
Previous Fourth Wave - The fourth wave within the preceding impulse wave of the same degree.
Corrective patterns typically terminate in this area.
Sharp Correction - Any corrective pattern that does not contain a price extreme meeting or exceeding
that of the ending level of the prior impulse wave; alternates with sideways correction.
Sideways Correction - Any corrective pattern that contains a price extreme meeting or exceeding that
of the prior impulse wave; alternates with sharp correction.
Third of a Third - Powerful middle section within an impulse wave.
Thrust - Impulsive wave following completion of a triangle.
Triangle (contracting, barrier) - Corrective pattern, subdividing 3-3-3-3-3 and labeled A-B-C-D-E.
Occurs as a fourth, B, X (in sharp correction only) or Y wave. Trendlines converge as pattern
progresses.
Triangle (expanding) - Same as other triangles, but trendlines diverge as pattern progresses.
Triple Three - Combination of three simple sideways corrective patterns labeled W, Y and Z, each
separated by a corrective wave labeled X.
Triple Zigzag - Combination of three zigzags, labeled W, Y and Z, each separated by a corrective wave
labeled X.
Truncated Fifth - The fifth wave in an impulsive pattern that fails to exceed the price extreme of the
third wave.
Zigzag - Sharp correction, labeled A-B-C. Subdivides 5-3-5.
 Gold/Silver Report
24 August, 2011
Please read the disclaimer at the end

Some Examples of Corrective Waves

Zigzags: (5-3-5) Zigzags: (5-3-5)
Bull market Bear market

Flats: (3-3-5) Flats: (3-3-5)

Bull market Bear market

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