Everything in the natural world moves in cycles. The four seasons. The rour "turnings" of social structure. The four ages of man. Even the Ancient Holy Scientists have identified the four ages of the natural world: Material, Electronic, Magnetic, and Etherial. These take many thousands of years, and we are right at the beginning of the electronic, in case you're interested,
Everything in the world of Mankind moves in cycles. Financial cycles have been studied by analysts ever since there have been financial markets.
Two of the great living market technicians one a billionaire who manages billions: Felix Zulauf and the other the preeminent technical analyst Tom McClellan, have both determined that the gold price moves in an eight year cycle. The first four years enjoy the primary upward force, while the second four continue to rise under the momentum created in the first four years.
2024 is the last year of the descending cycle, but Zulauf and McClellan believe most of the directional power of the cycle has been spent by the final year. Zulauf in particular believes that by the end of 2024 the power of the the next 8 year upcycle will already by firmly in place. This is because so many analysts and investors are aware of this cycle and will be front running the powerful surge that defines the first four years of the upcycle.
All technical analysis provides insight. If you're interested check out cycles research for yourself.
It is notable however that in this final year of what many technical anaslysts feel to be the end of downward pressure on gold, the gold price is still hovering near all time highs. And this with a very strong dollar and presistently high rates, nominal quantitative tightening, and what is widely believed to be a reviving economy. All things that tend to force gold towards lower prices.
The driving force behind this price rise has been the central banks of the wolrd. The central banks do not share the rosy perspective of most stock market analysts and investors. The central banks are very worried not just about inflation but about global liquidity. This is why even as they have been fighting inflation with higher rates, they have been providing liquidity to the markets through many facilities like the BTFP.
Inflation and illiquidity are two of the most powerful forces that push the gold price higher.
The central bank response to illiquidity is to flood the markets with cash, and bail out institutions and governments that are overwhelmed with debt. This debases the currencies and sends gold higher.
It is impossible to fight inflation and illiquidity. Bailing out illiquidity forces inflation higher. FIghting inflation causes illiquidity when debt levels are high.
The last eight years of near zero rates (until this recent rise) were enabled by a confluence of the forces of globalization and global peace which are both deflationary forces as lower input prices force goods prices downward and low defense spending is an enormous relief on global budgets.
The next eight years of de-globalization will put a steady upward pressure on prices, and nations that are aleady drowning in debt will have to commit untold trillions to ramp up their defense spending with two hot war raging and more on the horizon.
All these factors that have held gold down the past eight years will reverse over the next eight.
Especially since all the nations of the world, especially the United States, used the last eight years of deflationary force and artificially low rates to ramp up debt to obscene levels.
If you believe cycle analysis this is very clear.
Even if you don't, surely the pressures involved, regardless of the time frames, should be obvious.
And if it is not obvious now it soon will be, and then you will see investors following the lead of the central banks as they become aware and worried about liquidity themselves.
This is why cycles analysts are very bullish on the next eight years for gold.
Something to consider.
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