Did you know that there is an (alleged) cycle in the price of gold which approximates 8 years in length?
Here it is:
Submitted by Argentus Maximus, TFMetalsReport:
Since gold is in a bear market, or recently was in a bear phase, it would appear to be prudent to look at the downwaves of this cycle in the past. Then those periods can be compared with the downwave of 2012-2014.
So for a start let’s look at the 1970s 8 year cycle bottom:
Next came the 1980s bottom:
This major low was preceded by a secondary size low which came 2 years earlier, and the major low was several months “late” of the idealized wave.
The next low came in the early 1990s:
and the following low came here:
After this low gold went into it’s most recent substantial uptrend. Whether this rise is secular or cyclic is open to conjecture, though many commentators insist the 2000s gold bull was/is a secular bull, I myself think that that particular view is bull because everything is cyclic in some way or other., which may or may not be completed. To me, the gold bull was simply another 7-9 year bull cycle swing, the retracement of which is becoming quite mature.
There was an 8 year cycle bottom along the way during the gold bull:
At the above bottom, the early low also appeared, but when the “main low” came later, it failed to break the “pre” low, and a series of higher bottoms formed. Following this gold began to rise in value at quite a fast rate.
However a top formed and the 8 year cycle turned down once again.
We are fishing about for an end to this downswing at the moment. Though calls for super lows and for super bull swings (at the same time!) are beginning to emerge as they always do from the must-make-big-name-to-achieve-breakthrough pundit business, not to mention the retail bullion sales business who are naturally hoping upon hope for an end to the bear before all their clients are gone while at the same time keeping a long term bullish face and improving terms (lower premiums over spot) towards their remaining clientele. I have found that it is wise to look dispassionately at the date and close my ears to the conversational “rhubarb” floating around.
Here is how it looks with this particular idealized cycle superimposed for reference:
So we can see that the habits of 2nd term Presidents are still intact so far. Being such clever people with clever advisors, they have conjured up via totally innovational concepts and practices exactly the same results as the previous clever presidents’ advisors did before them ,and before them , and so on ad nauseum.
So this makes it appear that the gold low is not yet upon us, and another 12 months could be required to make ultimate low for this 8 year downswing.
But not every 8 year downswing is equal. Remember those 2nd year presidents were only “in” for some of the downwaves. Here are the late 20th century and early 21st century US Presidents:
Richard Nixon, Ronald Reagan, Bill Clinton, George W. Bush and Barack Obama have been elected president twice during the period shown in the gold price charts here.
I leave it to readers to consider which downwaves are the important waves to focus upon based upon who was “in” and for how long. For example, in some years the pre-bottom was higher or lower than it was in other years. This also requires to be taken into account. You have the charts here so this can be readily evaluated.
This leaves the issue of total aggregate global leverage, or to put it another way, maximum expected volatility for swings both upwards and downwards. Gold has certainly seen a significant downswing already, prior to the trading range of the past year or so, and if the swing gets pushed a great distance one way, the return stroke may reasonably be expected to exhibit some similar characteristics. However excluding all the other factors,of which there are undeniably a great number, the habitual behaviour of these powerful administrations is what it is, and they can be assumed to continue to indulge in modern day versions of exactly what their predecessors did before them.
Have a nice week everybody!