.................Two Articles Worth Reading
Two articles worth reading, see http://www.nytimes.com/2007/10/28/business/yourmoney/28mark.html, "A Half, a Quarter or None?," and http://www.nytimes.com/2007/10/28/business/28maker.html, "Beware of the Housing Fallout."
Gold does well in rising interest rate inflationary economic upcycles, such as during the real estate/mortgage/ credit boom from 2002-2006, gold averaged +30 to +35%/year from April 2001 to 5-11-06. Since 5-11-06 gold is doing about +5%/year (but, all of the upside versus 5-11-06's cycle high at $730.40 came in October 2007 due to massive liquidity provided by the Fed due to the mortgage/credit crisis and the half point Fed Funds rate cut that led to a weak US Dollar/firm gold) and should soon turn very negative the next year and enter (might this week) a Wave 2 Cyclical Bear Market. Gold's "rise" (really August 16 to October 2007 liquidity spike) from 5-11-06 to now has been/turned out to be rollover action.
The deflationary real estate/mortgage/credit bust that began in 2006 is a major negative for gold. Ignore the goofballs that say otherwise. Notice that, despite the huge spike move since 8-16-07 (http://stockcharts.com/charts/gallery.html?%24hui) due to the huge liquidity injection by the Fed in response to the mortgage/credit crisis, very few gold writers are even short term cautious, which shows just how incredibly goofy they are.
Cycle trendlines/channels used in concert with Elliott Wave patterns and gaps are the basis/crux of "Trade the Cycles." "Gaps action" is very important.
If one decides to trade volatile stocks/ETFs obviously paper trade for a while or trade very modest positions at first.
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 (basically) 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
Gold does well in rising interest rate inflationary economic upcycles, such as during the real estate/mortgage/ credit boom from 2002-2006, gold averaged +30 to +35%/year from April 2001 to 5-11-06. Since 5-11-06 gold is doing about +5%/year (but, all of the upside versus 5-11-06's cycle high at $730.40 came in October 2007 due to massive liquidity provided by the Fed due to the mortgage/credit crisis and the half point Fed Funds rate cut that led to a weak US Dollar/firm gold) and should soon turn very negative the next year and enter (might this week) a Wave 2 Cyclical Bear Market. Gold's "rise" (really August 16 to October 2007 liquidity spike) from 5-11-06 to now has been/turned out to be rollover action.
The deflationary real estate/mortgage/credit bust that began in 2006 is a major negative for gold. Ignore the goofballs that say otherwise. Notice that, despite the huge spike move since 8-16-07 (http://stockcharts.com/charts/gallery.html?%24hui) due to the huge liquidity injection by the Fed in response to the mortgage/credit crisis, very few gold writers are even short term cautious, which shows just how incredibly goofy they are.
Cycle trendlines/channels used in concert with Elliott Wave patterns and gaps are the basis/crux of "Trade the Cycles." "Gaps action" is very important.
If one decides to trade volatile stocks/ETFs obviously paper trade for a while or trade very modest positions at first.
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 (basically) 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, XAU
posted by Joe Ferrazzano at
1:42 PM
2 Comments:
I have enjoyed reading your blog over the last few years as it provides a different perspective. Why, though, haven't you changed the long term uptrend line target for the HUI in over a year. You keep using 200 - 220. The uptrend line that I use is at 280-300. This is the line that the HUI bounced off of in August 07. Wasn't that the selloff you were looking for?
By
Anonymous, at 4:48 PM
Hi,
Thanks for the kind words. August 2007 was not the Bear Market cycle low. Lower cycle lows occurred in June and October of last year/2006.
HUI chart 7 at Trade the Cycles Charts was drawn optimistically, assuming that it would turn up, so, instead of 200-220 maybe HUI's primary Secular Bull Market trendline should now be 210-230 or 215-235, but, it isn't 280-300.
It's better to be conservative than to be optimistic regarding price targets and trendlines, but, Trade the Cycles uses 5% follow through buy signals for major cycles, and, of course uses Elliott Wave also, where one might decide to buy or sell before buy/sell signals.
In other words, once HUI bottoms at 220ish or wherever, then hits a 5% major buy signal, that will define the primary trendline. Good luck.
By
Joe Ferrazzano, at 10:05 PM
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