The McClellan Market Report
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McClellan Financial Publications, Inc
Posted Dec 12, 2017
Gold took a rest day on Wednesday after initiating its breakdown move. This gives us a chance to take a look at a topic I have made reference to a lot lately, but have not shown here.
The 13-1/2 month cycle in gold prices is a really important cycle period, perhaps the most important one governing gold prices.
It is a topic we address frequently in our twice monthly newsletter.
(Click on image to enlarge)
The above chart shows gold versus a simple sine wave representation of that cycle. The reality is more complicated than just a sine wave. Typically there is a mid-cycle low, just as the sine wave pattern is peaking, plus or minus a month. And the arrangement of the price highs before and after that mid-cycle low can tell us about what lies ahead.
Left translation is when the peak before the mid-cycle low is higher than the one after. That’s a bearish configuration, and it says that the next major cycle low should go below the last one. We are now in a right translation configuration, which is more bullish and which says that the price level of the last major cycle low should not get taken out.
The upcoming major cycle low is due “this month”. Stating its arrival due date any more precisely than that goes beyond the limits of its inherent accuracy. Figure on plus or minus a month, so we are in the window.
But there is usually a washout selloff associated with the major cycle low, and we have not really seen that yet. I believe it is getting under way now, and I’ll be able to prove that 2 months from now.
The bullish point of this is that once we get in this 13-1/2 month cycle bottom, we enter the bullish phase, which is when the big gains for gold come. Knowing when the bottom is in makes for a hard task, so it is time to get watchful. This upcoming cycle will see both this cycle and the independent 8-year cycle both in a bullish phase, which makes for a really fun opportunity to contemplate.
Written Dec 6, 2017
Editor, The McClellan Market Report
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