Gold 8.5yr Cycle
wavepicker said:
Personally I believe gold still remains in a secular bull market. If that is the case then this mini crash will be a countertrend move within that long term secular bull. However this may only be the first leg of the countertrend move both in terms of price and time. Remember that this bull was 6 years in the making. It's going to take some time to correct this move. I estimate about 2 years. Using the 1970's gold bull as an analog, back then gold moved from $50 to $200 from 1970-1974. It then spent the next 2 years correcting back to the $100 level before resuming it's bull all the way to $880 in 1980. The countertrend move was just a springboard for it to move to higher.
Earlier in this thread I posted a monthly chart showing that gold moves in an 8.5 yr cycle. That cycle is 62 months along and as such is pointed hard down. This cycle bottoms in 2008/9. It is important to remember that the cycle bottom may not necessarily coincide with the ultimate low in gold. It might line up with a higher low after price eventually bottoms. This should just be used as a guide.
As for the current decline I am looking for a low that will lead to a rally that will correct the current down move.I beleive this will just be a relief rally(and not carry to a higher level) before price eventually carries to lower levels in the next couple of years. Either way, after this rally is finished volatility and rate price change will probably slow.
Hi wavepicker,
I read your previous postings on the 8.5yr gold-cycle and found this article by David Chapman (dated 25 Jan 2005).
http://www.321gold.com/editorials/chapman_d/chapman_d_012405.html
Key extracts:
"Just as there are cycles in the stock market there are also cycles in the Gold market. One of the best cycle analysts for Gold that we read is Ray Merriman of MMA Cycles. Mr. Merriman has identified what he believes is as eries of 8.5 year cycle lows in Gold. Our monthly chart of Gold shows that there have been 4 observations of this 8.5 year cycle with lows seen in 1976, 1985, 1993 and the April 2001 bottom.
The next one is due somewhere in 2009-2010.
If there is a 4.25 year cycle (half the 8.5 year cycle) it is sometime in 2005 and even into 2006. Merriman also postulates that there is an 18.5 month cycle of lows as well. It is quite possible that low was made in May 2004.
Merriman believes that the cycle of gold lows has a bigger 24year cycle and it is made up of three 8.5 year cycles. If that is the case 2001 would have ended that 24year cycle and we are in the process of new long cycle. Since this would be first leg up of a new 8.5 year cycle it should or could be the strongest as was the case witnessed in the 1970's. That tells us that we could go as late as 2008/2009 before we top out in this cycle.
Intriguing is the gold cycle of the 1970s. In that cycle Gold started at $35 in 1971 and peaked in late 1974 at around $190. Gold then went into a year and half slump falling all the way back to just above $100 in August 1976. It was from that point that it started on its sharp rise to $850 in January 1980. The biggest part of the rise was in 1979.
In the current cycle we bottomed in April 2001 and we have had a peak at in late 2004 at $431. If we are still trying to make the 4.25 year cycle low it is possible that we could remain weak on the precious metals for the next year or so. The long term bull trend line is currently coming in around $340 and rising so if we broke through $400/$410 then a collapse to those levels is possible.
Major support for Gold remains at $400/$410 and if that zone is broken the trend would definitely change to the downside. But there is also a bullish case that suggests that we may just continue the upward trend."
If I understand both of you correctly, to summarise and project/estimate:
Gold Cycle
- 8.5yrs or 102mths
- 3 sub-cycles of 34mths
- Last bottom in 14/05/2004
- Nex bottom in
March 2007
- Peak in
April 2008
- Bottom in
Oct 2009 (end of secular gold-bull)
Appreciate your thoughts and sharing.