..................................Inflation
Gold is a lead indicator for inflation, so, gold's Wave 1 Cyclical Bull Market from April 2001 until May 2006, in which it nearly tripled (did 30-35% each year), portended high inflation. US economic statistics tend to be overly optimistic. With skyrocketing health care, energy (in recent years), housing (bubble burst big time but there was very high lnflation in recent years), etc. the real inflation rate is probably multiples of the reported data.
From the New York Times
"The producer price index, which measures what businesses charge one another for everything from iron ore and diesel fuel to cases of soda pop, was 2 percent higher in November than in October, seasonally adjusted. The index had not risen by that much in a single month in more than 32 years, since the energy and stagflation crises of the mid-1970s. Even with the volatile prices of food and fuel removed, the “core” index rose by 1.3 percent for the month, the most since 1980."
The Wave 2 Cyclical Bear Market since 5-11-06 for HUI/XAU portended the current deflationary economic bust. The Fed will probably have to lower rates next year and will try to inflate the US economy out of deflation, as they did in recent years prior to the current economic bust. The housing bubble and the easy money credit bubble (refinancing, credit cards) plus massive budget deficits in recent years kept the US economy in decent shape.
For the previous post see http://tradethecycles.blogspot.com/2006/12/huinemxau-are-rallying-toward-their.html.
HUI/XAU's Wave 2 Cyclical Bear Market began 5-11-06, see charts 6 and 8 at http://www.joefrocks.com/GoldStockCharts.html. NEM's Wave 2 Cyclical Bear Market that began on 1-31-06 ended on 10-4-06 at 39.84, so, reliable lead indicator NEM is probably in a 5 yearish Wave 3 Cyclical Bull Market since 10-4-06, see chart 7 at http://www.joefrocks.com/GoldStockCharts.html. ....... http://www.JoeFRocks.com/ .
HUI NEM XAU
From the New York Times
"The producer price index, which measures what businesses charge one another for everything from iron ore and diesel fuel to cases of soda pop, was 2 percent higher in November than in October, seasonally adjusted. The index had not risen by that much in a single month in more than 32 years, since the energy and stagflation crises of the mid-1970s. Even with the volatile prices of food and fuel removed, the “core” index rose by 1.3 percent for the month, the most since 1980."
The Wave 2 Cyclical Bear Market since 5-11-06 for HUI/XAU portended the current deflationary economic bust. The Fed will probably have to lower rates next year and will try to inflate the US economy out of deflation, as they did in recent years prior to the current economic bust. The housing bubble and the easy money credit bubble (refinancing, credit cards) plus massive budget deficits in recent years kept the US economy in decent shape.
For the previous post see http://tradethecycles.blogspot.com/2006/12/huinemxau-are-rallying-toward-their.html.
HUI/XAU's Wave 2 Cyclical Bear Market began 5-11-06, see charts 6 and 8 at http://www.joefrocks.com/GoldStockCharts.html. NEM's Wave 2 Cyclical Bear Market that began on 1-31-06 ended on 10-4-06 at 39.84, so, reliable lead indicator NEM is probably in a 5 yearish Wave 3 Cyclical Bull Market since 10-4-06, see chart 7 at http://www.joefrocks.com/GoldStockCharts.html. ....... http://www.JoeFRocks.com/ .
HUI NEM XAU
Labels: Gold, Gold Stocks, HUI, NEM, Silver, Silver Stocks, SPX, XAU
posted by Joe Ferrazzano at
8:51 AM
