Gold’s 13-1/2 Month Cycle: Right Translation

September 11, 2017

Here is some long-term cycle analysis for gold courtesy of Tom McClennan. I know not all of you like technical analysis but I think the longer term analysis can be very useful. Plus this is a positive outlook for gold!

Click here for the original posting.

Gold has been pushing up to higher closing highs, which is getting the gold bugs all excited.  But we are now late in the 13-1/2 month cycle that is dominant in gold prices, and so we should expect a drop into the major cycle low due at the end of 2017.

But there is a lot more to the 13-1/2 month cycle than just when to expect the major lows.  For starters, there is a mid-cycle low that usually arrives around the mid-point of the whole cycle.  The mid-cycle low is usually not as punctual as the major cycle low, but it is still important for figuring out the message that gold prices have to convey.

Just noting the existence of a mid-cycle low is not all there is.  How prices behave around that mid-cycle low conveys information about what lies ahead.  If the high for the cycle arrives before that mid-cycle low, that is known as “left translation”, and it carries a bearish message about what lies ahead.  It says that the price bottom at the major cycle low should take out the last cycle’s bottom.

“Right translation” occurs when a higher high occurs after the mid-cycle low, and this says that gold prices are in a more bullish mode.  The prior cycle low should not get taken out at the next cycle low.  That is the condition we see right now, with gold prices pushing up to a higher high.

So now that we have this message of a more bullish condition in gold, we have some assurance that the Dec. 22, 2016 low of 1130.70 for near-month gold futures should not get taken out.  That still leaves a big distance that gold could drop between now and the end of 2017 without violating this “rule”.  But the general point is that strength late in the cycle breeds strength again during the next cycle.  So once we get past the major cycle low at the end of 2017, we should be able to look forward to larger gains again for gold prices.  Until then, though, gold has some late-cycle corrective work to do, if only to get the whole world convinced that gold can never go up ever again.  Once that work is done, the setup will be complete for the next uptrend.

Tom McClellan
The McClellan Market Report

    Sep 11, 2017 11:30 PM

    Interesting . . . always good to hear a new angle.
    It will be interesting to see of this lines up with the other technicians.

    Sep 11, 2017 11:36 PM

    Congratulations, my fellow Ameroconneds…$20 trillion….Obammy manged to double it, can Trump do the same…to $40 trillion? I think he can but at what point does the
    whole Neo-Feudal Casino Gulag Plantation Fractured Reserve Debt Based economic outhouse burn to the ground? And what will the price of gold be when the feral gooberment debt tops 40 trillion?

    It’s Official: Debt Tops $20 Trillion for First Time; Jumps $317,645,000,000 in 1 Day

    Sep 11, 2017 11:42 PM

    Hillaryarious….I wonder if Mr. Big Al Korelin will read this book…

    What Happened To “What Happened”: Amazon Slashes Hillary’s Book Price 40% Before It Hits Shelves

    Sep 11, 2017 11:28 PM

    Al will not read HRC’s book but he may buy one to use in the outhouse at his hunting lodge.

      Sep 11, 2017 11:41 PM

      If you wait a few weeks you could probably find it in the remaindered bin for 99 cents.

        Sep 11, 2017 11:55 PM

        Give it to Owl for a Christmas present…or maybe for Halloween…a trick but no treat…

          Sep 11, 2017 11:56 PM

          As I recall he read Obammy’s book…wonder if he read “It Takes a Village” which took a criminal to write.

    Sep 11, 2017 11:17 PM

    LONDON (AP) — British lawmakers voted a key Brexit bill past its first big hurdle in Parliament early Tuesday. But many legislators branded the bill a government power grab, and vowed to change it before it becomes law.

    After a debate that stretched past midnight, the House of Commons backed the European Union (Withdrawal) Bill by a vote of 326 to 290. That means lawmakers approve the bill in principle, but the government will now face attempts to amend it before a final vote later this year.

    A key plank in the Conservative government’s Brexit plans, the bill aims to convert thousands of EU laws and regulations into U.K. domestic laws on the day Britain leaves the bloc in March 2019.

    Prime Minister Theresa May said the measure “certainty and clarity” ahead of the divorce. Brexit Secretary David Davis said that without it, the U.K. faces “a chaotic exit from the European Union.”

    Sep 12, 2017 12:28 AM

    Gold miners using Indians for target practice in Brazil…

    Sep 12, 2017 12:38 AM

    The Apple Prison ! 1000 $ Pay fore Prison !

    Sep 12, 2017 12:48 AM

    It is funny to me that so many people still doubt this new bull market in the gold/silver miners. Here’s a weekly view of the XAU index priced in gold (GLD):