I think people use Link Method interchangeably. In my mind, I see your way as Story Method as it is a ‘story’. Whereas for Link, I would see it as an association between 2 items at a time.
So in your example:
Elephant, Watch: Elephant wearing a watch on its trunk
Watch, Butter: A watch eating Butter
Butter, Bus: A yellow bus is melting like a butter
Bus, Salt: A bus is filled up with salt rather than passengers
Salt, Cow: A cow appears from a pile of salt
Cow, Gravy: A cow swims in hot gravy, enjoying a bath
Gravy, Pistol: As you fire a pistol, its gravy flowing out of it
Pistol, Flag: A flag is erected from the tip of a pistol
When recalling, elephant would remind me of watch, watch reminds me of butter and so on. The advantage is that, you only focus on 2 at a time. Story method, sometimes I find, if the words are so random, can consume a bit more time to make up a story to link them together.