Gold at $32,000 in three years?

Never let it be said that Jeanne d'Arc doesn't publish anything bullish. Not convinced? Well how about gold reaching $32,000 by 2015? How do you like them apples, eh?

Still not convinced? Well, then read on, my little chuckie egg...

Sadly we're not the first to report on this - friend of Screwtape, Bron Suchecki, got the scoop here, but only because he has a time zone advantage over the rest of us, I'm sure... ;-)

Well known chartist Nick Laird, who provides a lot of the charts for Ed Steer at Casey Research has been following the gold market for at least as long as there's been an interweb. He has used and talked quite a bit about Elliott Wave Theory, which is a not entirely uncontroversial method of linking investor and broader social psychology to market trends (and sometimes vice versa), often over decades-long periods. Elliott Wave Theory has had some notable successes and failures, and has its fair share of proponents and detractors.

It will not surprise you that I'm something of a non-believer in EWT, although the more ungenerous amongst you would probably submit that I am a non-believer about most things. I attribute this peculiar state of mind of mine to long periods spent in GM Jenkins' coal cellar whilst being forced to reflect on 'the kind of person you are, Jeanne, and the kind of person you think you might like to be'. But I digress. The fact is that for better or worse, EWT has very much a firm hold in many investors' minds, and for that fact alone it is to be discounted out of hand at one's peril.

Nick Laird has just produced what he describes in true Aussie style as something of a 'ripper'. More to the point, he is hopeful that it will serve as 'a roadmap which gold may take as it climbs to new highs'. Here's the chart, followed by Nick's explanation in his own words:

The first two uplegs (the blue line) generate (through the formulae) the future uplegs (the red line) as the price heads to its peak at W5(5). The time, price and percentage of each leg up and down are shown on the edge of the chart. So, having left W4(A) behind, for the next 16 months we are heading up to W4(B).

The presumption is that the blue line (actual gold price) will stay above the red line for the first half of the next up-leg, falling to below the red line for the second half of the upleg and rising steeply into the peak of W4(B) as gold likes to do.

Perhaps gold's final top is W4(D) or W5(1) or higher. Perhaps the timing won't play out right, but this presumably will be something close to the shape of gold's rise over the next few years.

Exciting stuff for gold holders. It's not really for me to comment on whether or not I think this will or won't happen, as all things are possible, and I lack even the basic cursory details of EWT that I would need to go head-to-head with a real expert on charting (and, despite his modesty, on EWT) like Nick.

However, I can, I think, bring myself to point out the obvious. If $32,000 gold in 2015 were to come to pass then it would essentially accompany a devaluation of the dollar so quick, and so hard, that it would make your nose bleed.

This chart is not just a roadmap for price acceleration in gold. It is essentially the road map for the disintegration of an empire, the ruin of the world's reserve currency, and a time of fear not seen since Europe in the late 'thirties. For that reason, if no other, then even though I own gold myself and would like to make a bob or two out of it, I hope that Nick is wrong. I hope that he is very, very wrong.