The Fed Will Be Aggressively Lowering The Fed Funds Rate Soon
The Fed will be aggressively lowering the Fed Funds rate soon, since, at 5.75%, it's out of whack with the short end of the yield curve that's now in the neighborhood of 4%, see http://finance.yahoo.com/bonds. The bond market is obviously signaling deflation. The Fed is out of step with the bond market and is lagging the bond market big time.
The real estate/mortgage/credit inflationary upcycle/boom from 2002-2005 resulted in a weak bond market, therefore higher yields, and, resulted in a gold Cyclical Bull Market that ended on 5-11-06. Rock bottom interest rates and a very easy monetary policy at the Fed and at mortgage lenders led to a real estate/mortgage/credit inflationary upcycle/boom from 2002-2005, which kept the US/world economy reasonably healthy following the post March 2000 stock market bust, which was a very long term cycle peaking for the major averages.
The S & P 500 recently put in a modestly higher likely Cyclical Bull Market cycle high at 1555.90 (see chart 1 at http://www.joefrocks.com/GoldStockCharts.html) versus at 1552.87 that occurred in March 2000, but, basically, SPX's very long term upcycle/Secular Bull Market ended in March 2000, as did the NASDAQ's. The DOW 30 is probably peaking this year (versus March 2000) in dramatic rollover mode
The current real estate/mortgage/credit deflationary downcycle/bust is the reason why gold is in a Cyclical Bear Market since 5-11-06 heading for it's Secular Bull Market (since April 2001, HUI/NEM/XAU since late 2000, the large cap gold stocks lead the metal) uptrendline currently at $475ish.
Wave A of gold's Cyclical Bear Market bottomed at $542.27 in June 2006 (see chart 2 at http://stockcharts.com/charts/gallery.html?$gold), Wave B of gold's Cyclical Bear Market peaked at $698 in April 2007, so, gold is now in Wave C of it's Cyclical Bear Market.
Gold does well in an inflationary rising interest rate economic upcycle/environment, such as occurred from 2002 through 2005, and, gold does poorly in a deflationary declining interest rate economic downcycle/environment, such as the US currently finds itself in. This is basic stuff, yet, have you seen a single gold writer discuss this or mention the obvious Bear Market/downtrend since peaking at $730.40 on 5-11-06???
Some of the gold writers have basically become circus sideshows, with people reading their musings (more like amusings) in amazement, disgust, for a few laughs, etc. The gold sector must have some of the worst (wannabe in most cases) market timers and technical analysts of any sector.
Gold's technical condition is so obviously bearish now (see chart 2 at http://stockcharts.com/charts/gallery.html?$gold), that, to not at least be cautious, is a glaringly obvious sign that one doesn't know a Bull from a Bear Market. Also, gold put in a bearish nearly perfect double top at $688.40 (late July)/$688.10 (early August) recently, and, has a near term downtrend since April's Wave B cycle high at $698, as well as a long term downtrend/Bear Market since the Wave 1 Cyclical Bull Market cycle high at $730.40 on 5-11-06.
As a long term multi-year investor in any stock, commodity, etc. you want to buy near the primary multi-year Secular Bull Market/very long term upcycle trendline. Gold's primary multi-year Secular Bull Market/very long term upcycle trendline is at $475ish right now, so, gold would be a great buy in the $475-500 range. When the vast majority of gold writers say it's a great time to buy or are bullish, as they almost always are, it's rarely a good time for long term investors to buy.
HUI/XAU's Wave 2 Cyclical Bear Market began 5-11-06, see charts 7 and 9 at http://www.joefrocks.com/GoldStockCharts.html. The primary Secular Bull Market trendlines since late 2000 are at 200-220 for HUI and at 85-90 for the XAU. Those are the targets for where the Cyclical Bear Market will bottom. NEM's Wave 2 Cyclical Bear Market began on 1-31-06. ....... http://www.JoeFRocks.com/ .
HUI NEM XAU
The real estate/mortgage/credit inflationary upcycle/boom from 2002-2005 resulted in a weak bond market, therefore higher yields, and, resulted in a gold Cyclical Bull Market that ended on 5-11-06. Rock bottom interest rates and a very easy monetary policy at the Fed and at mortgage lenders led to a real estate/mortgage/credit inflationary upcycle/boom from 2002-2005, which kept the US/world economy reasonably healthy following the post March 2000 stock market bust, which was a very long term cycle peaking for the major averages.
The S & P 500 recently put in a modestly higher likely Cyclical Bull Market cycle high at 1555.90 (see chart 1 at http://www.joefrocks.com/GoldStockCharts.html) versus at 1552.87 that occurred in March 2000, but, basically, SPX's very long term upcycle/Secular Bull Market ended in March 2000, as did the NASDAQ's. The DOW 30 is probably peaking this year (versus March 2000) in dramatic rollover mode
The current real estate/mortgage/credit deflationary downcycle/bust is the reason why gold is in a Cyclical Bear Market since 5-11-06 heading for it's Secular Bull Market (since April 2001, HUI/NEM/XAU since late 2000, the large cap gold stocks lead the metal) uptrendline currently at $475ish.
Wave A of gold's Cyclical Bear Market bottomed at $542.27 in June 2006 (see chart 2 at http://stockcharts.com/charts/gallery.html?$gold), Wave B of gold's Cyclical Bear Market peaked at $698 in April 2007, so, gold is now in Wave C of it's Cyclical Bear Market.
Gold does well in an inflationary rising interest rate economic upcycle/environment, such as occurred from 2002 through 2005, and, gold does poorly in a deflationary declining interest rate economic downcycle/environment, such as the US currently finds itself in. This is basic stuff, yet, have you seen a single gold writer discuss this or mention the obvious Bear Market/downtrend since peaking at $730.40 on 5-11-06???
Some of the gold writers have basically become circus sideshows, with people reading their musings (more like amusings) in amazement, disgust, for a few laughs, etc. The gold sector must have some of the worst (wannabe in most cases) market timers and technical analysts of any sector.
Gold's technical condition is so obviously bearish now (see chart 2 at http://stockcharts.com/charts/gallery.html?$gold), that, to not at least be cautious, is a glaringly obvious sign that one doesn't know a Bull from a Bear Market. Also, gold put in a bearish nearly perfect double top at $688.40 (late July)/$688.10 (early August) recently, and, has a near term downtrend since April's Wave B cycle high at $698, as well as a long term downtrend/Bear Market since the Wave 1 Cyclical Bull Market cycle high at $730.40 on 5-11-06.
As a long term multi-year investor in any stock, commodity, etc. you want to buy near the primary multi-year Secular Bull Market/very long term upcycle trendline. Gold's primary multi-year Secular Bull Market/very long term upcycle trendline is at $475ish right now, so, gold would be a great buy in the $475-500 range. When the vast majority of gold writers say it's a great time to buy or are bullish, as they almost always are, it's rarely a good time for long term investors to buy.
HUI/XAU's Wave 2 Cyclical Bear Market began 5-11-06, see charts 7 and 9 at http://www.joefrocks.com/GoldStockCharts.html. The primary Secular Bull Market trendlines since late 2000 are at 200-220 for HUI and at 85-90 for the XAU. Those are the targets for where the Cyclical Bear Market will bottom. NEM's Wave 2 Cyclical Bear Market began on 1-31-06. ....... http://www.JoeFRocks.com/ .
HUI NEM XAU
Labels: Gold, Gold Stocks, HUI, NEM, Silver, Silver Stocks, SPX, XAU
posted by Joe Ferrazzano at
3:35 PM
