Figure 6-10 is a weekly high-low chart of Chicago wheat futures.

During the four years after the peak

at $6.45, prices trace out an Elliott A-B-C bear market with excellent internal interrelationships. Wave
B is a contracting triangle. The five touch points conform perfectly to the boundaries of the trendlines.
Though in an unusual manner, the triangle's subwaves develop as a reflection of the Golden Spiral,
with each leg related to another by the Fibonacci ratio (c = .618b; d = .618a; e = .618d). A typical
"false breakout" occurs near the end of the progression, although this time it is accomplished not by
wave e, but by wave 2 of C. In addition, the wave A decline is approximately 1.618 times the length of
wave a of B, and of wave C.

Figure 6-10

Thus, we can demonstrate that commodities have properties that reflect the universal order that Elliott
discovered. It seems reasonable to expect, though, that the more individual the personality of a
commodity, which is to say, the less it is a necessary part of human existence, the less it will reliably
reflect an Elliott pattern. One commodity that is unalterably tied to the psyche of mass humanity is
gold.

Gold

Gold often moves "contra-cyclically" to the stock market. When the price of gold reverses to the upside
after a downtrend, it can often occur concurrently with a turn for the worse in stocks, and vice versa.
Therefore, an Elliott reading of the gold price has in the recent past provided confirming evidence for
an expected turn in the Dow.

In April of 1972, the long-standing "official" price of gold was increased from $35 an ounce to $38 an
ounce, and in February of 1973 was again increased to $42.22. This fixed "official" price established
by central banks for convertibility purposes and the rising trend in the unofficial price in the early
seventies led to what was called the "two-tier" system. In November 1973, the official price and the
two-tier system were abolished by the inevitable workings of supply and demand in the free market.

The free market price of gold rose from $35 per ounce in January 1970 and reached a closing
"London fix" price peak of $197 an ounce on December 30, 1974. The price then started to slide, and
on August 31, 1976 reached a low of $103.50. The fundamental "reasons" given for this decline have
always been U.S.S.R. gold sales, U.S. Treasury gold sales and I.M.F. auctions. Since then, the price
of gold has recovered substantially and is trending upward again [as of 1978].

Despite both the efforts of the U.S. Treasury to diminish gold's monetary role, the highly charged
emotional factors affecting gold as a store of value and a medium of exchange have produced an
inescapably clear Elliott pattern. Figure 6-11 is a price chart of London gold, and on it we have
indicated the correct wave count, in which the rise from the freemarket liftoff to the peak at $179.50 an