GOLD TECHNICALS and CENTRAL BANKS

 

For all of the technical traders following either fantasy "systems" like hidden pivots and elliot waves - which have a place, as everything has a place in trading - one of the great systems employed by sophisticated technical traders is the "8 year cycle."  Three hard up years followed by five down years in a series of elliot style waves.  If you go back and check the charts this system has some correlation to reality for example if you take 2001 as a starting point, the next three years go higher - but then the next 5 retracement years also go higher.  There is a blip down just where'd you'd hope for one in year 8 - but so what?

However, some very smart people look to this to give a gerneral shape to the movement of gold.

Just so you know 2025 is an A up year.  (However 2024 has been pretty up)

The same way the Commitment of Traders 'COT' report figures heavily in technical trader's assessment of the gold sentiment as the Big Commercials tend to move the markets according to how short they are in order to lock in profits at perceived tops.

All well and good.

I think it's a good idea for every gold investor/trader to have some fluency with these ideas.

The elephant in the room, however is the Global Central Banking community.  They dwarf every other player, every other trend, every other system.  And they don't really care about historical cycles.

We are living in peculiar times.  Neil Howe calls it the Fourth Turning and this term has captured the imagination of many fund managers because it seems to sum up the period of enormous Global Unrest the seems to rhyme in a frightening way with the last Fourth Turning - the 1930's.

It is a period of uhpheaval.  A period where trends that have been simmering for decadeds come to a boil.  These trends include Decades of Financial Represssion that has resulted in mass disillusion with Democracy, with Capitalism, with Socialism, with the Honesty and Probity of all Leaders and their Institutions, and resentments that express themselves through hatred of anything identified as Other.

And on a global scale this is expressed in a rapid De-globalization pitting New Powers (of some very ancient countries) like China and India and the Russia and Iran and the BRICS against old powers (of much younger countries) like the US and Europe.  And even within Europe there is a splitting up rather than a coming together of binding institutionsn like the EU.

For whatever reason (something having to do with 5000 years of history of gold as money) - the entire CHINA/RUSSIA/ IRAN/INDIA block has decided that GOLD is an integral weapon to be amassed and horded as a means of stabililzing economies during this period of turmoil.  Also to use as a weapon against what they see as the tyrrany of the dollar as a settlement currency.

The Buying Power of these Central Banks is so overpowering that things like the Commitment of Major Commercial Traders is a tiny drop in the bucket in comparison.  The mathematical elegance of technical systems that at times do desrcribe movements leading into this period of Turmoil seem to fall  apart under the raw power of Central Banks pivoting to protect themselves from a coming storm.

My point is this: Look at the broad movements of the Central Banks and seek to emulate them as best you can.

Know about these other systems and technical trends.  But if you rely on them you'll be swept aside by this ineluctable tide of History.