Gold’s bull market is NOT finished, but is instead on the verge of launching into a startling climactic period into late 2016, or early 2017. This article explains why.
The above introductory comments are edited excerpts from an article* by David Nichols (fractalgoldreport.com) as posted on Safehaven.com under the title Special Report: The 64-Month Pattern in Stocks and Gold.
Gold is showing a 72 month timing signature.
It is hard to make out details on the full chart of the bull market, so let’s zero in and look at how the 72 month patterns have been developing.
After the top in Month 144, gold entered a major corrective mode, which took prices back down for a full 38.2% retracement of the entire bull market.
Since the energy for this retracement is always part of the trend up, it is not anything unusual, or even bearish, to see this type of corrective move. It’s just how a market pattern re-energizes for the next uptrend. In the case of gold, this 38.2% retracement has played out over a vast time-frame, which has made the last 3 years seem like an interminable bearish slog — which is exactly what it is designed to accomplish.
Month 36 for this correction just arrived, in August 2014. This is half of the Month 72 timing signature. If we look back at what happened around Month 36 in the previous 72 month phases, something interesting emerges. The first half of the 72 month pattern has played out over 38 or 39 months, with a new phase — up, in both cases — emerging right after that timing point.
Month 38 for this current move is coming right up, in October, with Month 39 arriving in November. If this pattern holds up a 36 month bull market in gold should be emerging by December 2014.
This bull market will announce itself very loudly, and very clearly, with a breakout above the long consolidation triangle that has been developing over the past year, and which is now stretching towards the “still point” or the apex of the triangle. This is the precise point where all of the energy from the move up has leaked out of the market, setting the stage for a burst of fresh energy.
This consolidation process is exactly equivalent to dropping a tennis ball on a hard floor. The first bounce will be strong, but subsequent bounces will lose energy until the ball finds equilibrium, resting on the floor. All of the energy during these bounces was imparted at the top, and the subsequent bounces represent a dissipation of this energy.
Again, it’s important to remember that these monthly patterns take shape on a time-frame that is not natural to us as market participants. So please keep in mind that gold will continue to frustrate the bulls, and appear to be in terrible shape, up until the start of the next phase of the bull market in December. You will continue to doubt gold’s future right up until the time when it breaks out.
It’s also important to know that you will also doubt the viability of the breakout, as during the early stages gold will do everything it can to “shake off” the maximum number of people. Typically this involves a very sudden and large rally to throw off the bears, and then an equally energetic dump to throw off the early bulls so it’s not going to be an easy ride into the top in 2016 or 2017, except during the late stages, when you will be nervous about protecting your profits. It’s never easy.
At this point I can hear what you’re thinking: what happens if gold breaks to the downside, and drops below the big retracement level at $1,225?
The easy answer to that is it would be quite disastrous. That would likely mean a 72 month correction is in the works, and the gold bull market is really and truly over.
However, there is a very strong — super strong, even — argument that the gold bull market is not only not over, but destined for bigger things. This is the 36 year cycle of monetary crises, which has hit like clockwork, right on schedule, over the course of history, including the entire history of the United States.
(I have discussed this big cycle in detail in previous reports, but it’s worth a quick re-cap now:
- 36 years prior to 2016, in 1980, gold hit its massive bubble peak, coincident with rampant inflation.
- 36 years before that, in 1944, the world gathered in Bretton Woods and anointed the US dollar as the global reserve currency.
- In 1907 there was the “Panic of 1907” as a liquidity crisis swept the country.
- Prior to that was the “Panic of 1873”
- And yup, you guessed it, 36 years before that was the “Panic of 1837”
- Almost unbelievably, the first banking/liquidity crisis hit the US right on schedule around 1801, as early speculation in real estate during the first years of the new republic eventually came down for a correction.
This flawless historical record points to 2016 — or possibly 2017 — as the time when this current monetary crisis will come to a head – and gold will be a major beneficiary of this coming monetary crisis.)
Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.
*http://www.safehaven.com/print/35456/special-report-the-64-month-pattern-in-stocks-and-gold (Copyright © 2008-2014 Fractal Gold Report. All Rights Reserved.)
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