Gold & The Cycles

A number of questions have come in from is the Cycle Inversion negating the low in 2014  Or is verdict still out? There is nothing yet that suggests the low is in place. Corrections are 2 to 3 units of time and that means a max of 3 years from the intraday high in 2011 gives us 2014 and from the highest annual closing 2015.

The target of 1150 was the MINIMUM and from a price objective, the model would be satisfied with that 1151 June low if the timing is right. That does not negate pressing lower to retest the 1980 high of $875. But just as we have a difference between the annual intraday high and annual closing, we have a significant difference between CASH and FUTURES. The Cash low is June 28th, but the futures on the actual COMEX floor is December 31st. This creates a difference in timing as well for the February target calculated from the CASH disagrees with the FUTURES that is April.

Nevertheless, the whole Cycle Inversion thing is critical. The 1987 Crash bottomed precisely on the model rather than producing a high. That was the Cycle Inversion that pointed to a high in 1989.

ECM-Wave-1977-1985

 

The 1980 high in gold took place with the ECM rising. Gold fell from 1974 into 1976 by about 50% as STAGFLATION emerged – cost-push inflation, which we are experiencing again right now but from rising taxes rather than oil prices.

ECM2011

Now look at gold took off with the decline in the ECM from 2007 and peaked at the bottom in 2011. This is showing that gold is inverting and will rally with the shift in assets from public to private. Because of this, even if the low is 2014, there will not be the blast off until the ECM peaks in 2015.75. During that decline in the ECM we should see the next rally and this is where we are likely to start to see more widespread government defaults at the state and local levels in Europe and the USA.