Gold Or How To Predict A Brexit
EWM Interactive | Jun 26, 2016 06:20AM ET
Gold is considered to be a “safe haven” in times of uncertainty. So the common logic says that when something totally unexpected happens, such as Brexit, panicked investors buy gold to protect themselves from the falling prices in other markets, thus causing the price of the yellow metal to surge. So far so good. The problem is that such explanation can only be given post-factum – after the unexpected event has happened and after gold has already surged. It seems like there is no way for traders and investors to expect and prepare for the rise, since there is no way to predict the event, which is claimed to have caused it.
When Britain announced it wants to leave the European Union on Friday, June 24th, its decision came as a complete shock. As a results, safe haven seekers rushed to buy gold causing its price to skyrocket from $1250 to $1358 in less than 8 hours. So if no-one saw the Brexit coming, no-one could have expected that gold is going to fly, right? Well, almost no-one.
As visible, the Elliott Wave Principle suggested we should be ready for a small pullback in wave (b), followed by another strong rally to a new multi-month high in wave (c). You know that most experts and analyst were giving the “Bremain” campaign a substantial lead, so if we were to listen to them, gold’s advance would have come out of the blue for us. Instead, we trust the Wave principle and all we need to make a forecast is a price chart. An updated one of gold is given below.
It turns out that a forecast made over four days earlier correctly predicted how gold was going to develop during the entire week. No, we did not predict the British referendum result, it came as a surprise to us, as well. We did, however, predict gold’s reaction to it, which is almost the same thing to traders and investors. The Wave principle’s ability to put traders ahead of the news is often unbelievable.
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