Gold Monthly Review
What does Tesla have to do with gold, GLD, or GDX? Today’s monthly review takes an unusual route: we’ll compare what most would call incomparable. The goal is simple—spot interesting signals and patterns across these assets and outline the prospective paths that follow.
CANDLES
GLD and TSLA
In November 2021, when I said TSLA had formed Three Gaps on the weekly and would pay dearly, most dismissed it as nonsense. Twelve months later, TSLA had lost about 75%—it’s hard to fight candle signals.
This time it’s GLD. I zoomed out to the preceding structure and, interestingly, in both cases the super-rally followed a large triangle—fully consistent with Elliott’s definition of a thrust. The potential outcome for GLD is fairly clear: I expect all three gaps to close, implying a drop of 15% or more. The open question is whether this sudden, unexpected decline will trigger broader panic and a larger sell-off.
It will also be instrumental to observe the character of the potential decline. An impulsive structure down would be a major concern. I also recall seeing the same triangle-plus-three-gaps pattern somewhere else in the last year or two. I’ll try to find it and share later.
Gold
I’ve already covered the statistical implications of September’s close in the previous report. Today, the focus is the daily frame: it is grossly overbought and showing divergences on RSI and MACD. On Thursday, a Bearish Engulfing formed and was not negated on Friday. It could be an early signal, but confirmation is still required.
Another bearish element is more apparent on the GDX charts, which I’ve included in this review.
GDX Miners
GDX’s candle map is highly informative. Nine green candles in a row—with the last three forming a potential Advance Block—warrant close attention. The 3D close printed a bearish Harami Cross, and the daily shows classic RSI and MACD divergences, similar to gold but more pronounced. Another unusual observation is the duration of overbought conditions: neither GDX nor gold has ever held the daily RSI above 70 for over a month—until now.
Taken together, these bearish signals—extreme technical stretch and multiple candle combos—paint a picture of overwhelming concern. Now, let’s review the Long-Term Outlook and take a quick look at Elliott Waves on the micro level.
As outlined in the August 21 Long-Term Outlook, gold is likely building a significant top—one that could take months to complete. That hypothesis stands.
Gold – Long Term Outlook – August 21
As discussed previously, “a particular concern is the continued no-break advance in the monthly RSI, which has not been this elevated since 1980—45 years ago. Apparently, this implies a new reality in which gold is never corrected again. However, statistical analysis suggests a potential loss of about 35% if gold follows the average historical path after such an RSI stretch. In May, gold formed a bearish candle—June will show whether that signal is confirmed. Gold is now in a zugzwang position: any move on the monthly frame will only worsen either the technical conditions or the candle structure.”
Elliott Wave
Potential Ending Diagonal
On September 20, I noted significant damage to the impulsive structure of gold’s advance. Since then, the metal has continued to form a concerning wave, with subwaves beginning as corrective structures. There is potential for a non-overlapping Ending Diagonal that appears to be nearing its apex. Notably, the final wave of this diagonal could itself unfold as a diagonal—potentially creating a double Ending Diagonal with all the brutal consequences that come with it.
Summary:
The entire precious metal and miner complex—Gold, GLD, and GDX—has reached a point of extreme technical tension. September’s bullish closures looked impressive on the surface, but beneath them lies a rare and statistically improbable overextension. Gold’s 9-month candle closed more than 400 points above the 3σ level, a 7-in-100,000 event, while RSI readings on both gold and miners have stayed above 70 for over a month—something never before recorded in the dataset.
Viewed together, these signals complement and reinforce one another. The complex appears to be nearing a major top formed through gradual exhaustion across multiple frames. While short-term bullish momentum still lingers, the broader setup shows an overextended, fragile structure primed for mean reversion. Once confirmed by candle sequences or an impulsive decline, a synchronized correction across gold, GLD, and miners could unfold with substantial depth and duration.
The underlying structure has deteriorated from impulsive to corrective, suggesting exhaustion rather than renewed strength. Gold’s advance likely approaches the apex of an Ending Diagonal, with the risk of a “double diagonal” formation that historically leads to sharp reversals. GLD’s triangle-then-thrust pattern fits the classical Elliott definition of a terminal move, and its three open gaps are statistical magnets that point roughly 15% lower once the reversal begins. GDX confirms the warning through candles—nine consecutive green bars, the last three forming a potential Advance Block, followed by a 3D bearish Harami Cross and strong RSI/MACD divergences.
Happy Trading!
