Now that oil has made a lower intermediate low warning bells are ringing that the commodity complex has more than likely begun the move down into its three-year cycle low. That bottom isn’t due until May or June of next year at the earliest.
With the larger three-year cycle forces now in control, and the commodity complex in decline, intermediate cycle lows (ICL’s) will tend to be exceptionally vicious affairs. We are already seeing this play out in the gold market as it tests (and will probably break below) the $1180 support zone sometime next week. Silver and platinum have already broken below their summer 2013 lows, and it should only be a matter of time before gold follows. This is going to cause a major panic in the gold bug community, and that is to be expected during ICL’s with the CRB now in the grip of its three-year cycle decline.
Now before one gets too bearish and starts to short the commodity complex willy-nilly, remember that we are close to an intermediate cycle low here and we’re going to get a convincing countertrend rally soon. Just understand that the rally is almost certainly going to fail to make new highs and will ultimately roll over and move down into the three-year cycle low next summer. And as scary and frustrating as the current intermediate decline is, the upcoming decline next summer is going to be a nightmare of catastrophic proportions for commodity investors. As I have been suggesting for months now I think traders need to focus mainly on the stock market for the next 8-12 months and let the commodity sector finish the move down into its three-year cycle low.
During this period, as commodity prices trend generally lower, a tailwind for the economy will be created as living expenses will decrease giving consumers more money for discretionary spending. Input costs for businesses will decline causing profit margins to expand. All in all, I think this could create the environment for stocks to deliver a final parabolic blow-off top at roughly the same time that the CRB hits it’s three-year cycle low.
Now for the silver lining. At bear market bottoms, which we are going to get in the commodity and gold markets sometime next summer, valuations reach levels that have no basis in reality. They are purely driven by irrational fear. For those that can bide their time, wait patiently, and get to a bear market bottom with their cash intact, this is where real opportunities are created.
I believe at the next major multiyear cycle bottom next summer, we are going to see an opportunity in the commodity complex, especially in precious metal mining stocks, that only comes around once every 40 or 50 years. This is the spot where millionaires and billionaires are created for those with the ability to buy at that bottom.
I suggest resource investors curb their animal spirits for now, and focus on the stock market. Our time will come. We just need to make sure we get to the bottom with our capital intact.
For more in-depth analysis of how these larger cycles are likely to unfold, consider a subscription to the nightly SMT newsletter.
A giant H/S pattern has been evident in HUI and majors (GG,ABX) for a couple of years now. I expected a return to normalcy as cause, but it looks like reason may be collapse in Euro to par with USD. Gold in euros is about flat. I have long felt that US inflation has been held down due to recession/deflation in EU. If eurozone starts to recover due to lower euro, inflation in US may go from 1.5-2% to 3-4% quickly, but probably not much higher. This may result in a 1-2 year spike in miners (further left on H/S). Also, what will happen to bonds?
On another matter, I was not able to participate on the free sample a couple of weeks ago due to login problems. An old Chrome version could not get past the HTTPS and an updated FireFox just recycled back to login page. Is there a known problem and has it been fixed?
No problems that I know of. No one else has mentioned having any problem.
I do not concur with your opinion. It will turn around much sooner. I am thinking late October/early November at earliest and late Februari/early March at the latest. During that period it is time to accunulate as many shares as you can in quality precious metal stocks. I am following a chart from a highly skilled technical analyst since June 2013 and he has been spot on so far. Nevertheless it is interesting times.
The metals are due for an intermediate degree rally any time now, But the odds are high that it will be another failed rally just like the last one and make a lower low. I doubt the entire commodity complex will head down into a three year cycle low and gold will somehow ignore it. Gold wasn’t able to ignore it in 2008 or in 2012, so I doubt it will be immune in 2015.
Gary, but by saying they are due for an intm rally any time, you must have meant “any time the dollar takes a breather”?…. otherwise, cannot really be convinced it will rally?
Like I said, it should be another failed rally that doesn’t make a higher high.
If it were to make a higher intermediate high then I would reverse my stance 180 degrees, but I don’t think the odds are very good of that happening.
Who is that “highly skilled technical analyst” if he is open to the public?
Your articles have been pretty accurate. I also respect when you admit that the market did not agree with you. There is a scam artist by the name of Bo Polny that every one better beware of. He is a fraud of the highest level or lowest character.
I think Bo just tells gold bugs what they want to hear.
agreed. Polny is a scam of the highest order. There are fifty year veterans that can be wrong and often are.
Yet they have the utmost integrity. And you’ll make money with them.
When you get “assurances”, and absolute certainties, BEWARE.
I ditto as Stefan has wrote. I believe the metals are in a triple bottom base. I wonder who the analyst you refer to is?
I am of the opinion that commodities in general are on the verge of major move upward; but it is not because of your cycle theory’s (that I find to be a bunch of nonsense). Simple technical analysis using RSI, MACD and Stochastics show conclusively that the $USD is massively overbought and is ripe for a major correction down to 81 on the index (minimum). Therefore, commodities will reverse to the upside. October’s have often been looked at as very negative in general, but fact is, October has often been a bear market killer, and I expect this October will prove to mark a major bottom for gold.
Actually over the years I’ve come to the conclusion that technicals are a bunch of nonsense as they don’t predict anything. They just follow behind price action. I can’t tell you how many times I’ve heard that the technicals are saying price is going lower… right before a cycle bottom forms and price turns higher. Or the technicals are saying price is going higher… right before a cycle tops and price moves back down.
Gary, is it possible for you to judge the quality of information if I post a couple of links to this “Highly skilled technical analyst”? He is very clever, smart and always humble. At the same time he is demanding, it is not about, tips and get rich fast advise, it is all about learning the market and the tools to read charts. He says that markets are manipulated yes, but only to a some degree. “How is it possible for me to describe the charts and market if it is totally manipulated”. Another great word from him about cycles, a couple of posters was sceptical about cycles, then he wrote “If your life cycle is coming to an end, try to break it”. I have learned more in the latest two years from him than the past 16years before that. Sorry for my english, I am a very small hobby investor from Sweden 🙂
Take care!
Sure go ahead and post the link.
Stefan:
Don’t worry, just post it, at least the name.
Ok, get ready folks here it is:
http://www.tfmetalsreport.com/comment/331108#comment-331108
The one and only argentus maximus or Norman Greene from Ireland.
Distribution phase:
https://www.youtube.com/watch?v=Ux_4KfpRv2U
Gold analysis in euro;
https://www.youtube.com/watch?v=NUcJ8YU_xQE
I don NOT subscribe, I only think he knows what he is talking about,, fair and square.
to those that think gold and gold miners will bottom in october, let me remind you that november and december is tax selling losses and there will be plenty of them again this year. So for those whom want to buy miners, wait until the selling is done.
Wow. I’m new at this and I admit, I’m confused.
For the record I am not talking about miners, it’s about gold price.
Here is a call for gold $850
http://finance.yahoo.com/blogs/talking-numbers/this-chart-says-gold-is-going-to–850-140106065.html?soc_src=mediacontentstory
But I will stick with Norman’s analysis …
Finally, Gary has a chart where gold isn’t about to go to the moon starting tomorrow morning! When I was a subscriber to his newsletter I asked him why he never showed a chart hypo with gold grinding sideways and down for months if not longer instead of just going straight up like he always showed…( this was like last year ) He always discounted my questions. turns out…..he now thinks I was absolutely right.
Looking like Bo Polny GOT IT RIGHT and actually called the exact bottom.
He called a Triple bottom the day it occurred. Here is the link: http://www.silverdoctors.com/tag/bo-polny/
Gold has gone up each day since the low just as he wrote it would.
Very exciting. So hope he is correct, as I have a good deal of Silver at $17 and Gold at $1200 after reading his post last week.